Airtel feels pressure from new rival as profit drops 66% q-o-q

25 Jan 2017

India-based telecoms group Bharti Airtel has reported total revenue of INR233.357 billion (USD3.42 billion) for its third fiscal quarter ending 31 December 2016, representing a decline of 3.0% compared to the year-ago period and a drop of 5.3% quarter-on-quarter. The arrival of an aggressive new Indian competitor in the shape of Reliance Jio Infocomm during the period under review was identified as the main reason for the slump, with Airtel’s mobile service revenue in India dropping by 6.5% q-o-q despite strong subscriber growth, the operator having added 5.9 million net new users during the quarter. The group reported EBITDA of INR85.705 billion for its Q3, representing a slight increase from INR84.749 billion a year earlier, but down 9.5% from INR96.662 billion at end-September 2016. Net profit for the three-month period more than halved to INR5.036 billion from INR14.607 billion in the preceding quarter. CAPEX, meanwhile, saw a recent high, reaching INR58.537 billion compared to INR55.082 billion a year earlier, and INR52.875 billion in Airtel’s Q2.

Commenting on the operator’s recent troubles, CEO and Managing Director, India and South Asia Gopal Vittal said in a statement: ‘The quarter has seen turbulence due to the continued predatory pricing by a new operator. The present termination costs at INR0.14 which are well below cost has 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. At the same time our commitment to provide a superior experience to our customers has led to revenue market share crossing a lifetime high of 33%.’

India, Bharti Airtel