Airtel books 37% fall in full year profit

10 May 2017

Indian telecoms group Bharti Airtel has reported a 12% year-on-year decline in turnover for the three months ended 31 March 2017 – the fourth quarter of its financial year – alongside a 1% fall in revenue for the full year. Turnover for the quarter totalled INR219 billion (USD3.3 billion), compared to INR250 million in March 2016, whilst full-year revenue slipped to INR955 billion from INR965 billion in 2015/16. EBITDA for the group fell by 13% y-o-y to INR80 billion for the quarter, but grew by 4% for the full-year period to INR356 billion. Net profit, however, plummeted by 72% for the quarter, and by 37% for the twelve-month period, to INR4 billion and INR38 billion, respectively.

The slump was attributed largely to the arrival of aggressive new player Reliance Jio Infocomm (Jio) in its domestic market in Q2 2016/17 and the related hike in competitive pressures. The newcomer’s free offerings sparked a price war, leading to a steep decline in ARPUs and a decline in its mobile data customer base. Indeed, blended ARPU in India fell by 19% on an annual basis to INR158 (from INR194), with ARPUs for voice and data falling by 17% to INR114 (INR138) and INR162 (INR196) respectively. Whilst Airtel’s mobile subscriber base continued to grow despite the pressure of the new arrival, reaching 274 million users at end-March 2017 compared to 251 million a year earlier, its overall mobile data customer base declined to 57 million from 58 million. Despite the pressure from Jio, Airtel maintained some momentum in the segment, recording a total of 43 million mobile broadband (3G and 4G) users, compared to 35 million in March 2016.

Airtel’s top-line was also negatively impacted by the sale of two of its African units (Sierra Leone and Burkina Faso) and, as such, revenue from its African subsidiaries fell to INR50 billion in Q4 2016/17 from INR65 billion a year earlier. On a like-for-like basis and in dollar terms, Airtel claimed that total revenue across its remaining 15 African subsidiaries grew by 2% for the quarter, and 3% for the year. Similarly, Airtel excluded the operational data of the divested units for the sake of comparison, claiming a total of 80 million mobile customers across Africa, up from 75 million in March 2016. Of that total, 18 million were mobile data users, compared to 15 million a year earlier. Nevertheless, blended ARPU has continued its downward trend, reaching USD3.7 in Q4 2016/17 from USD3.9 in the corresponding period of 2015/16.

Commenting on the group’s performance, India and South Asia CEO and MD Gopal Vittal was quoted as saying: ‘The sustained predatory pricing by the new operator has led to a decline in revenue growth for the second quarter in a row. The telecom industry as a whole also witnessed a revenue decline for the first time ever on a full year basis. The deteriorating health of the industry was compounded by the tsunami of incoming voice traffic from the new operator as a result of which significant investments had to be made just to carry the incoming traffic on our network. The net result of this was a revenue decline of 7.1% in Q4 even as EBITDA margins eroded by 2.9%. FY 16/17 saw a muted top line growth of 3.6% versus the double digit growth witnessed in preceding years.’

India, Bharti Airtel