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Indian phone market price war hits Bharti Airtel's quarterly profit

01 November, 2017, 01:06 | Author: Kristen Ingram
  • Bharti Infratel Ltd reported a 17 per cent drop in second-quarter profit missing analysts’ estimate as higher expenses weighed

In fact, net profit before exceptional items for India came in at Rs 121.4 crore, compared with Rs 306.7 crore for Airtel's Africa operations, underlining the pressures on the local operations, while operations in Africa show continued signs of improving, say analysts.

The consolidated revenues for just-ended quarter, at Rs 21,777 crore, represented a year on year drop of 10.4 per cent (reported drop of 11.7 per cent) on an underlying basis (that is adjusted for Africa and Bangladesh divested operating units and tower assets sale), Airtel said in a statement. It has clocked revenue of Rs 3,648 crore for the second quarter of 2017-18, up from Rs 3,292 crore posted during the same quarter a year back.

The company - which has 282 million wireless subscribers - admitted that the mobile market continues to experience "value erosion and financial stress led by competitive pressures".

Its net debt at the end of September quarter stood at Rs 91,480.1 crore, higher by 4.1 percent compared with previous quarter.

The company's consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) for the September-quarter was at Rs 8,004 crore, down 15.4 per cent year-on-year with the EBITDA margin dropping by 1.6 percentage points to 36.8 per cent.

He added that this would eventually force operator consolidation and exits as witnessed in the recent past.

Airtel's overall data customer base increased 5% year-on-year to reach 65.7 million.

Airtel's second quarter net profit of 3.43 billion rupees ($53 million) was its smallest profit in 19 quarters and its sixth consecutive drop in quarterly profit.

India's telecom industry is roiled by a price war triggered by the entry of billionaire Mukesh Ambani's wireless venture Jio in September past year.

It can be recalled that Reliance Jio had launched its services, offering all services free of cost, exactly at the same time past year.

"Airtel remains committed to its goal of increasing revenue market share in this competitive environment by providing superior customer experience and strategically investing behind building more data capacities", Vittal added.

India ARPU for voice and data combined fell 6.3% on quarter to its Rs 145, its lowest ever.

In April, Jio started charging customers for the first time, stirring hopes of a partial recovery in the industry.

Shares of BHARTI AIRTEL LTD. was last trading in BSE at Rs.497.65 as compared to the previous close of Rs. 492.8. Recurring PAT of Rs3.43 bn (Rs 343 crore) was ahead of our expected Rs 2.32 bn (Rs 232 crore) despite materially higher-than-expected net finance costs of Rs 23 bn (Rs 230 crore) (Rs19 bn (Rs 190 crore) expected).

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