Bharti Airtel registers 29% drop in profits despite revenue, subscriber growth

30 Oct 2013

India’s Bharti Airtel has booked a 29.0% year-on-year decline in net profits for the three months ended 30 September 2013, as revenue growth was outstripped by rising financing and tax costs. Airtel registered total turnover of INR213.244 billion (USD3.478 billion) for its second quarter, an increase of 9.9% from INR193.999 billion twelve months earlier. EBITDA expanded by 15% on an annualised basis to INR68.321 billion, with an EBITDA margin of 32.0%, whilst pre-tax profits edged up to INR14.468 billion from INR14.420 billion. Financing costs rose by 74.2% y-o-y to INR16.111 billion and tax expenditure grew to INR8.879 billion from INR7.195 billion a year earlier, leading to a 29.0% slump in net profits to INR5.120 billion. Airtel attributed the rise in financing costs to forex restatement and derivative losses as a result of rupee depreciation.

In terms of operations, Airtel’s domestic wireless provider registered 2.508 million net additions for the quarter, increasing the cellco’s mobile subscriber base to 193.457 million. The proportion of pre-paid users on Airtel’s network continued to fall, reaching 95.4% at end-September 2013, from 95.6% three months earlier, and 96.0% in the year-ago period. A 4.0% quarter-on-quarter drop in average monthly voice usage caused ARPU to dip by INR8 per month to INR192, although data usage, subscriptions and ARPU continued to grow. Airtel India’s mobile data subscribers increased to 50.631 million from 46.584 million at end-June 2013, of which 8.015 million were 3G users (6.796 million in Q1 2013/14). Data ARPU increased by INR7 q-o-q to INR70, as average usage expanded by 13.8% to 231MB per month. Total data transfers on the cellco’s network more than doubled y-o-y to 33.630 billion MB (from 15.879 billion MB), increasing by 23.3% on a quarterly basis.

Across Airtel’s African markets meanwhile, the group’s total subscriber base grew to 66.378 million, registering 2.175 million net additions for the quarter. Competition and regulatory pressure continued to drive down ARPU for voice services – which fell by USD2.2 y-o-y to USD4.7 – despite an increase in average monthly usage to 143 minutes, from 138 minutes a year earlier. Mobile internet services continued to grow in popularity, however, with data customers making up 26.4% of the group’s African subscribers, compared to 23.8% in Q2 2012/13. ARPU for data services was USD1.5, up slightly from USD1.0 a year earlier, whilst total data traffic on Airtel’s African networks almost doubled on an annual basis from 2.145 billion MB to 4.215 billion MB.

India, Bharti Airtel