Voice and data help Bharti beat estimates in Q1

During the quarter voice realisation per minute increased 0.7% sequentiallyto 33.49 pa i se, average real is at ion per user increased 0.5% to R139 but minutes of usage shrank 0.2% sequentially to 414 minutes. However, the total minutes on network grew by 2.2% sequentially to 314.8 billion minutes. The signs of competitive pressure was visible with the monthly churn rate moving up to 3.6% from 3.3% in the preceding quarter.

On the data front, the trend was maintained. Data as a percentage of mobile revenue grew 23.7% against 23.3% in the preceding quarter. Realisation per MB declined 2.5% to 22.31 paise but usage on MB basis grew 5.2% to 904 MBs. Data Arpu was up 2.6% sequentially at Rs 202.

Finance cost during the quarter increased 14% to Rs 1,942.4 crore while tax expenses were down 6.5% to Rs 1,008.9 crore compared with the preceding quarter. The net debt was down by 7.5% to $6,891 million on sequential basis.

“The year has begun well with revenue growth of 10.3% y-o-y and continued revenue market share gains,” Gopal Vittal, managing director for India and South Asia operations at Bharti said in a statement.

On the regulatory front, the biggest challenge before Bharti would be the upcoming auctions where the reserve price for the prized 700 MHz spectrum has been fixed at a steep R11,485 crore per MHz. Otherwise, it has strengthened itself on the 4G front by acquiring spectrum in the 1800 MHz band from Video con Telecommunications and 2300 MHz band from Aircel. It has, thus the capability to offer 4 G services across the country, which steals the first mover advantage from Reliance Jio Infocomm.

On the Africa front, the company has closed the sale of its operations in Sierra Leone and Burkina Faso to Orange. The TowerCo divestment in 9 of the 11 countries have been closed and settled and in the remaining two countries will be closed shortly. The net proceeds from all the above divestments is approximately $3.25 billion, which helped it to retire a significant part of its debt. The total debt on account of Africa currently stands at approximately $5.25 billion. The proceeds of all the sale transactions being in dollar/euro denominations significantly reduced its forex risks apart from yielding better receipts in rupee terms. For instance, during the Africa acquisition (June 2010) the dollar/rupee rate was 47 while the receipts for the recently closed transaction came at a dollar/rupee rate of 67.

During the quarter, Bharti had a net forex loss of R748 crore because of the 42.1% devaluation of the Nigerian naira, which has been classified under exceptional items. Except for Nigeria, stable currencies in most of the geographies resulted in lower forex and derivative losses of R309 crore compared to R797 crore in the corresponding quarter last year.