Airtel posts lowest net in 14 yrs on tariff war

Q4 profit plummets 78% as cut in global termination charges hurts

Telecom major Bharti Airtel on Tuesday reported its lowest quarterly net profit in at least 14 years, as competition with free voice calls and dirtcheap data tariffs from new entrant Reliance Jio ate into its margins.

Airtel posted a consolidated net profit of Rs 82.9 crore (or 21 paisa per share) in January-March quarter of 2017-18 fiscal as compared to Rs 373.4 crore (or 93 paisa a share) in the same period of the previous fiscal.

This was the eighth consecutive drop in quarterly profit and the smallest since April-June 2004.

Billionaire Mukesh Ambani's Reliance Jio, which debuted in September 2016, has signed up a staggering 168 million subscribers by offering affordable data and free calls (and ploughing billions of dollars into the infrastructure and network that transmits them).

Without naming Jio, Gopal Vittal, MD and CEO, India and South Asia, Bharti Airtel said: "The telecom industry continues to witness below cost, artificially suppressed pricing".

Also, industry revenues were further adversely impacted this quarter due to the reduction in international termination rates, he said.

Airtel, he said, continued to consolidate its leadership position during the fourth and last quarter of 2017-18 fiscal.

"Our strategic investments in data capacities, innovative digital content through Airtel TV, customer friendly bundles and upgrade programs led to the highest ever mobile data customer additions of 15 million during the quarter," Vittal said.

Bharti Airtel ended the fiscal year with its highest ever capital expenditure of Rs 24,000 crore. "We intend to continue the rollout momentum next year as well," Vittal added.

Airtel's total revenue fell by 10.5 per cent to Rs 19,634 crore in the fourth quarter of 2017-18, Airtel said.

For the full fiscal year that ended in March 2018, Airtel's net profit came in at Rs 1,099 crore, over 71 per cent lower than Rs 3,800 crore logged in FY 2016-17.

During the quarter, the India revenues fell 7.5 per cent year-on-year on an adjusted basis to Rs 14,796 crore, even as Africa revenue grew 10.7 per cent over the same period of previous year, fuelled by "strong growth in data and Airtel money transaction value".

The company said, "Year on year growth primarily (was) impacted by mobile drop of 13.5 per cent".

Other businesses have witnessed healthy year-on-year growth, that is, 10.7 per cent in Digital TV and 11.2 per cent in Airtel Business on an underlying basis, it added.

The company said that its customer base, now at 413.8 million spanning 16 countries, is 12.1 per cent higher year on year (excluding divested units).

Bharti Airtel said that the acquisition of Tigo Rwanda country operations in Africa have been consummated, during the quarter.

Giving details of other operational parameters, Airtel said that the mobile data traffic swelled to 1,616 billion megabytes (MB) in the quarter, up 505 per cent over the year-ago period.