Bharti Airtel’s 4Q net profits slashed, sales up

Bharti Airtel’s Q4 net profits slashed, sales up

02 MAY 2013

Bharti Airtel, India’s largest mobile operator, saw Q4 net profits cut by almost a half as higher interest costs, tax charges, depreciation and African losses took their toll, but there were solid growth indicators, particularly in its domestic market and on the African continent.

Net profits for the three months ended 31 March 2013, at INR5.09 billion ($94.3 million), were 49.4 per cent down compared with the same period the year before. Analysts, reports Reuters, had expected the firm to post a net profit of INR7.41 billion.

Bharti Airtel has now notched up its thirteenth consecutive quarter of falling profits. The company’s full-year net profits, at INR2.27 billion (down 46.6 per cent over the previous year), is the smallest in seven years.

Operating free cash flow fell 23.1 percent to INR 29.6 billion, thanks largely to an increase in capital spending from INR23.8 billion to INR35.2 billion.

More encouragingly, Q4 consolidated revenues were up 9.2 per cent, to INR204.5 billion, compared with Q4 2012. Full-year revenue jumped 12.4 per cent, to INR803.1 billion.

Driving the sales uptick during Q4 was a 71 per cent growth in mobile internet services in India, a 24 per cent rise in Digital TV sales, a 17 per cent increase in ‘airtel business’ (a B2B service), and 12.6 per cent jump in revenue from its African operations. During Q4 2013 Africa generated sales of $1.12 billion, which is around 30 per cent of group turnover.

Bharti Airtel’s voice and data ARPU in India has also risen, to INR159 (INR153) and INR55 (INR47) respectively, helped in part by stricter customer identification requirements, improving the quality of its subscription base. The average monthly churn rates over Q4 2013, at 3.2 per cent, was a marked improvement on the 5.9 per cent monthly average during Q4 2012.

As of 31 March 2013, Bharti Airtel had 188.2 million mobile customers in India, up 3 per cent from twelve months previously. Of that sum, 6.4 million were 3G data customers, up 23 per cent from 4Q 2012.

Across its entire operations in 20 countries, Bharti Airtel had 271.2 million customers as of 31 March 2013, up 8 per cent over the previous 12 months

“I am pleased to see that market corrections have started with improvements in the quality of customer acquisitions, and that pricing stability is returning to the sector in India,” said Sunil Bharti Mittal, chairman and managing director at Bharti Airtel. “With Africa over its peak of organic investments we are optimistic about the potential for improved market shares and margin expansions, Finally, on the data front, we are now witnessing consistent quarter on quarter growth across all geographies.”

Bharti Airtel entered Africa in 2010 with a $9 billion acquisition of mobile phone operations in 15 countries (from Zain) but, according to Reuters, has still to make a profit there.

“The operating metrics of our African business are a mixed bag,” said Bharti Airtel in a statement. “[There was] growth in customer base by 10.6 million, traffic up by 29 per cent, voice minute usage per customer up from 124 minutes to 131 minutes and data accounted for 3.8 per cent of overall revenues, up from 2.9 per cent last year. However, due to the pricing pressures, voice realisation per minute fell from 5.16 cents to 4.06 [US] cents, and ARPU declined from $6.40 to $5.30.”

In separate news, Bharti Airtel said that it will acquire a 30 per cent stake in Bangladesh’s Warid Telecom to make it a wholly-owned subsidiary. In January 2010, Bharti had acquired a 70 per cent stake in the Bangladesh arm of Warid Telecom, a wholly-owned subsidiary of the Dhabi Group.

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Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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