Airtel profit plunges in face of “predatory pricing” - Mobile World Live

Airtel profit plunges in face of “predatory pricing”

25 JAN 2017

Bharti Airtel reported a sharp drop in profit for its fiscal Q3 (calendar Q4 2016) as lower data and voice tariffs in its domestic market pulled down its turnover for the first time since 2002.

Airtel’s net profit for the quarter ending 31 December fell 54.6 per cent to INR5.04 billion ($73.8 million), while revenue dropped 3 per cent to INR233 billion from a year earlier.

In India, where Airtel is the largest mobile operator, revenue rose 1.3 per cent to INR180 billion, with strong growth in its digital TV (up 18 per cent), Airtel business (13 per cent) and homes divisions (11 per cent) offsetting a slowdown in mobile revenue growth, which fell 1.6 per cent to INR135.6 billion.

“The quarter has seen turbulence due to the continued predatory pricing by a new operator,” said Gopal Vittal, Airtel’s CEO for India and South Asia, referring to Reliance Jio’s generous free data offers. He said mobile termination rates are currently well below cost, which 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.”

Despite the entry of Jio in September, Airtel managed to expand its mobile user base by 9.3 per cent year-on-year to 266 million and grow its mobile broadband customers by 22 per cent to 37.7 million. It added 6 million mobile subscribers in the last quarter.

Highlighting the impact from falling data rates in its home market, mobile data revenue accounted for 22.8 per cent of mobile revenues during the quarter compared with 23.1 per cent in the same period of 2015.

Data ARPU dropped 13 per cent quarter-on-quarter to INR175, while voice fell 6.4 per cent to INR123 during the same period.

Other markets
In Africa the company’s net loss widened to $93 million in the recent quarter from $74 million a year ago, and revenue increased 4 per cent year-on-year to $919 million. Raghunath Mandava, Airtel’s CEO for Africa, said data consumption and revenue grew 91 per cent and 24 per cent respectively year-on-year, led by stronger data networks in many countries.

Mobile subscribers fell 2 per cent from a year ago to 80.4 million.

Airtel chairman Sunil Bharti Mittal said recently the company is considering the sale or merger of some of its African interests in an attempt to cut a $12 billion debt pile.

Revenue from Airtel’s South Asia operations fell 11 per cent to INR2.45 billion due to the merger of its Bangladesh unit with Robi Axiata, in which Airtel has a 25 per cent stake. The results reflect its Bangladesh operations until 16 November 2016.


Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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