Rising costs bite into Bharti’s profits

8 Aug 2012

Bharti Airtel has posted total revenues of INR193.5 billion (USD3.51 billion) for the three-month period ended 30 June 2012, up by 14.0% year-on-year. Rising costs have cut into the group’s earnings, however, with the company recording net profits of INR7.6 billion for the period under review, compared to INR12.2 billion a year earlier. Earnings before interest, tax, depreciation and amortisation (EBITDA) were up slightly y-o-y at INR58.5 billion from INR57.1 billion in the year-ago period. Bharti’s EBITDA margin was 30.2% for the quarter, down by 3.4 and 3.1 percentage points y-o-y and quarter-on-quarter respectively. CAPEX was INR35.8 billion, down from INR43.5 billion a year earlier, but a sizeable increase compared to expenditure of INR21.2 billion and INR23.8 billion in the previous two quarters. Operating expenses for the group were INR91.8 billion, making up 47.4% of the telco’s total revenues, compared to INR75.7 billion and 44.6% twelve months earlier.

In terms of operations, the group’s total customer base reached 260.7 million subscribers, recording net additions of more than nine million for the quarter and an increase of 12.9% y-o-y. Bharti reported a 9.0% rise in voice traffic on its networks to 274.6 billion minutes. Towerco Indus towers, in which Bharti owns a 42% stake, upped its total number of towers to 109,318 from a 108,992 a year earlier and increased its total tenancies from 204,958 to 216,447 over the same period.

Whilst Bharti’s core mobile business in India saw quarterly net additions of 6.0 million subscribers over the three month period, ARPU fell from INR189 per month to INR185 per month q-o-q. Voice traffic increased by 4% q-o-q to 239.3 billion minutes, as did data usage, which jumped by 26% to 12.6 billion MBs of data. Of the cellco’s 38.7 million data users, however, only 3.7 million were 3G subscribers.

Developing its African operations, Bharti has signed 3G licence agreements in two more countries, Burkina Faso and the Democratic Republic of Congo (DRC), adding to the seven nations where it currently offers 3G services, namely Ghana, Kenya, Nigeria, Tanzania, Zambia, Republic of Congo (Brazzaville) and Sierra Leone. By 30 June 2012, Bharti had rolled out 15,439 base transceiver stations (BTS) in Africa, 4,787 of which were 3G-enabled, compared to 14,831 and 3,205 on 31 March 2012. The nascent service is yet to gain traction on the continent, however, with the group noting that whilst non-voice revenues made up 12.9% (10.6% in March 2012) of total mobile revenues from Africa, only 3.4% (3.2%) was from data, whilst 7.0% (5.6%) was from messaging.

India, Bharti Airtel