Bharti Airtel Q2 net profit slips 65% to ~1.18 billion

Aided by one-off gains, telecom major Bharti Airtel posted a consolidated net profit of ~1.18 billion for the September quarter. This was 22 per cent higher than the ~0.97 billion it reported in the June quarter, though down 65 per cent over the year-ago period.

There were two one-off gains, including a deferred tax write-back, resulting in an exceptional gain of ~10.1 billion. Without this, the company would have been in the red, as the pre-exceptional loss was ~9.65 billion.

On the operational front, pricing pressure continued to take a toll on revenue and margin, especially for its India business.

Consolidated revenue was ~204 billion, dropping 6.2 per cent on a year-on-year basis and growing 1.7 per cent sequentially; it was at par with Street estimates.

The India revenue at ~149 billion declined 10.9 per cent from a year before. Mobile revenues fell 7.2 per cent over a year, led by a continued slide in average revenue per user (Arpu), impacted by competitive pricing pressure, the company stated. Arpu dropped 4.5 per cent to ~101 sequentially and almost 29 per cent from last year’s ~142. However, the fall was lower than the 7-8 per cent decline to ~97-98 most analysts had predicted, due to the full impact of Telenor India (absorbed into Airtel earlier this year) customers on the Airtel network and the seasonality impact.

The Arpu of Reliance Jio also fell in the quarter, by two per cent. However, it still leads the sector on this parameter at ~131.7, on strong subscriber addition. While Airtel’s subscriber base fell two per cent over the previous quarter to 329.6 million, Jio’s rose 17.2 per cent to 252.3 million. If this pace continues and Airtel is unable to make much headway, Jio would probably overtake Airtel before the end of this financial year on subscriber numbers. Consolidated operating profit margin decreased by 570 basis points to 31.1 per cent in the quarter, as compared to 36.8 per cent in the corresponding quarter last year. Consolidated Ebit (earnings before interest and taxes) dropped 67.3 per cent to ~1.07 billion. Net debt increased to ~1.13 trillion, from ~1.03 trillion in the June quarter. Consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation), at ~63.4 billion, declined 20.7 per cent over a year.