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Steady Growth: Bharti Airtel exhibits strong quarterly perfomance

May 30, 2014
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Bharti Airtel continued to be on a high growth trajectory during the January-March 2014 quarter. Its net profits grew by 89 per cent from Rs 5.08 billion for the quarter ended March 2013 to Rs 9.61 billion in the corresponding quarter in 2014. This was due to an increase in revenues, driven by the growing uptake of 3G services, and a decrease in finance costs from Rs 11.15 billion to Rs 9.91 billion during the review period. Meanwhile, total revenues from operations increased by 13 per cent from Rs 195.82 billion for the quarter ended March 2013 to Rs 222.19 billion during the same quarter in 2014.

Indian operations continue to improve

The company’s net profits (excluding exceptional items) from its Indian operations grew twofold, from Rs 10.84 billion for the quarter ended March 2013 to Rs 23.77 billion in the corresponding quarter in 2014. Total revenues from operations also increased by 11 per cent, from Rs 133.57 billion to Rs 149.1 billion, during the same period.

On the operational front, while the minutes on the network increased by 5 per cent from 253.14 billion to 264.84 billion, voice usage per customer declined by 4 per cent from 455 minutes to 437 minutes. However, voice ARPU improved by 2 per cent from Rs 159 to Rs 162 due to a hike in tariffs and withdrawal of discounted minutes, a step taken by the company over the last few quarters. The move also resulted in a 6 per cent improvement in voice realisation per minute.

Similarly, the data service business witnessed significant improvement. The total data subscribers increased by 34 per cent from 43.49 million as of March 2013 to 58.07 million as of March 2014. Further, data traffic increased by 95 per cent from 23.93 billion MB to 46.6 billion MB during the same period. This surge was on account of low tariffs maintained in the past few quarters. As a result, data usage per customer grew by 48 per cent, from 187 MB to 277 MB during the same period. This, in turn, has led to an increase in data ARPUs, which grew by 43 per cent from Rs 55 for the quarter ended March 2013 to Rs 79 in the corresponding quarter of 2014.

Lag in international operations

Unlike its Indian operations, Bharti Airtel’s international business continued to suffer. Its net losses from international operations (excluding exceptional items) almost doubled, from Rs 5.76 billion for the quarter ended March 2013 to Rs 12.18 billion in the same quarter in 2014. This was due to a 23 per cent rise in operational expenses, from Rs 32.63 billion to Rs 40.14 billion during the same period.

The revenues from the company’s African operations, which account for 94 per cent of its total international business revenues, increased marginally from $1.12 billion for the quarter ended March 2013 to $1.14 billion during the corresponding quarter in 2014. The growth in revenues was driven by the increasing uptake of data services but was impacted due to the slowdown in the voice market. Voice ARPUs declined by 10 per cent to $4.4 in March 2014, despite a year-on-year increase of 20 per cent in voice usage per customer to 136 minutes. This was largely on account of the decline in voice tariffs during late 2013. In contrast, the data market showed improvements both in terms of usage and ARPUs, driven by the success of the company’s mobile money service, Airtel Money. While the data usage per customer increased by 31 per cent year on year to 96.4 MB, data ARPUs grew by 17 per cent to $1.4 in the quarter ended March 2014.

The South Asian market displayed a similar trend on the operational front in the voice and data segments. While voice ARPUs declined by 2 per cent from $2.4 for the quarter ended March 2013 to $2.3 in the same quarter in 2014, data ARPUs grew by 7 per cent from $0.5 to $0.6 during the same period.

Future outlook

Bharti Airtel’s future profitability may be impacted on account of interest costs on debt, which are being charged on payments for spectrum acquired in the February 2014 auction. On the upside, voice tariff hikes are expected to result in better ARPUs and revenues in the near future. Further, expansion of the 3G data service business will drive Bharti Airtel’s growth in the coming quarters. The operator has been allowed to provide 3G services through intra-circle roaming agreements following the Telecom Disputes Settlement and Appellate Tribunal’s judgment. In this regard, Bharti Airtel has already resumed 3G intra-circle roaming services in eight circles, which will help maintain its growth in the data market.


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