Airtel Q3 net profit down 55% to Rs 504crore

NEW DELHI: India’s largest telecom operator in terms of subscribers, Bharti Airtel reported over 54.6% fall in consolidated net profit to Rs 504 for the third quarter ended December 31, 2016.

The telecom operator had posted a net profit of Rs 1,108.1 crore in the same period a year ago.

However, the company had reported a 4.9% year-on-year (y-o-y) drop in its consolidated net profit at Rs 1,461 crore for the quarter ended September 30, 2016.

“The consolidated revenues for Q3’17 at Rs 23,336 crore, Y-o-Y flat (drop of 3.0% on reported) on an underlying basis (viz. adjusted for Africa divested operating units, tower assets sale and merger of Bangladesh operations). Consolidated revenue growth muted by 3.2% on account of Nigeria currency devaluation on Y-o-Y basis. Consolidated mobile data revenues for the quarter at Rs 4,049 crore, Y-o-Y flat on an underlying basis,” the company said in a statement.

“India revenues for Q3’17 at Rs 18,013 crore grew by 1.8% Y-o-Y. Slowdown in Mobile revenue growth primarily due to free voice and data offering by a new operator. India other businesses have witnessed healthy growth e.g. 17.7% in Digital TV, 12.5% in Airtel Business and 10.8% in Homes on Y-o-Y basis. Mobile Data revenues at Rs 3,087 crore de-grew by 3.0% Y-o-Y. Mobile Broadband customers increased by 22.0% to 37.7 Mn from 30.9 Mn in the corresponding quarter last year. Mobile Data revenues now contribute to 22.8% of Mobile India revenues vis-à-vis 23.1% in the corresponding quarter last year,” it said.

“In constant currency (1st Mar’16) terms, Africa business performance has improved and underlying revenues grew by 6.0% Y-o-Y (5.4% reported constant currency Y-o-Y), the highest in last nine quarters. Data revenues at $ 153 million grew by 24.0% Y-o-Y, led by increase in Data customer base by 21.3% and traffic by 91.0%. Data ARPU flat at $ 2.9 compare to the corresponding quarter last year. Data revenues now contribute to 16.7% of overall Africa revenues vis-à-vis 14.2% in the corresponding quarter last year,” the statement said.

“Our continuous focus on costs and efficiencies has resulted underlying EBITDA margin improvement by 4.9% Y- o-Y(up 4.5% reported constant currency Y-o-Y) to 24.5%. Active Airtel Money customer base at 8.8 million, increasing the total transaction value on Airtel Money platform by 32.8% to $ 4.0 billion,” it added.

“Consolidated EBITDA at Rs 8,570 crore grew 1.1% Y-o-Y with EBITDA margin expanding by 1.5% to 36.7%, driven by Africa margin expansion of 4.9% Y-o-Y on an underlying basis. The consolidated EBIT of Rs 3,675 crore represents a Y-o-Y de-growth of 10.3% on account of higher spectrum amortization costs in India. Net interest costs of Rs 1,810 crore have risen from Rs 1,360 crore in the corresponding quarter last year – largely due to increased spectrum related interest costs,” telco said.

Forex and derivative losses for the quarter came in at Rs 126 crore compared to Rs 57 crore in the corresponding quarter last year. After accounting for exceptional items (net losses of Rs 114 crore), the Consolidated Net Income for the quarter stands at Rs 504 crore compared to Rs 1,108 crore in corresponding quarter last year.

“Consequent to the spectrum acquired worth Rs 14,281 crore during Oct’16 auction, the company’s consolidated net debt has increased to $ 14,339 million from $ 12,232 million in the previous quarter. Net debt excluding the deferred payment liabilities to the DOT and finance lease obligations is now at $ 7,650 million. Net debt to EBITDA ratio (LTM) for the quarter has moved to 2.69 times from 2.28 times in the previous quarter. High spectrum costs and consequent increase in associated amortization costs has resulted in deterioration of Return on Capital Employed (ROCE) to 7.1% from 8.6% in the corresponding quarter last year,” the company said in a statement.

“The quarter has seen turbulence due to the continued predatory pricing by a new operator. The present termination costs at 14 paise which are well below cost has resulted in a tsunami of minutes terminating into our network. This has led to an unprecedented year on year revenue decline for the industry, pressure on margins and a serious impact on the financial health of the sector,” said . Gopal Vittal, MD and CEO, India & South Asia.

At the same time our commitment to provide a superior experience to our customers has led to revenue market share crossing a lifetime high of 33%. Airtel revenues grew by 1.8% Y-o-Y and our non-mobile businesses continue to grow at a healthy clip and now contribute a sizable 24% of our total revenues”.

“Underlying Africa revenue growth for the quarter accelerated to 6.0% Y-o-Y, the highest in last 9 quarters. Our efforts to improve the quality of customer acquisitions have resulted in reduction in customer churn to 4.9% from 6.0%. Data consumption and revenues have grown by 91.0% & 24.0% Y-o-Y respectively, led by stronger data networks. Our strong focus on cost control has led to a significant underlying EBITDA margin expansion of 4.9% Y-o-Y, which now stands at 24.5%. Africa is now generating positive free cash and is PBT positive in constant currency,”said Raghunath Mandava, MD and CEO, Africa.

Summary of the Consolidated Statement of Income – represents consolidated Statement of Income as per Indian Accounting Standards (Ind-AS)

(Amount in Rs crore, except ratios)