Bharti Airtel was able to prove wrong all those who predicted that it will post its first quarterly loss in 15 years, as its non-mobile business such as enterprise and tower unit more than made up for the losses from its mainstay wireless telecom operation.
The company’s India mobile operations did indeed post an operating loss of Rs 482 cr for the March quarter compared to a profit of Rs 167 cr in the previous three months, but it the positive contributions of other businesses offset the impact. That said, the performance of the India mobile business’ performance was a far throw from the operating profit of Rs 1,439 cr it posted a year ago.
Against the operating loss of Rs 482 cr posted by the India mobile business, the African mobile business posted operating profits of Rs 1,055 cr, thus making up for the India numbers. That said, the Africa business is largely debt funded, and the cost of capital — in terms of interest payments — is not included in the above number.
The second contributor was the enterprise telecom business, which chipped in Rs 840 cr to the operating profit line, while the tower operations chipped in another Rs 844 cr. Both were slightly down from their numbers for the preceding quarter.
DTH contributed 154 cr to the operating profit level.
As a result, for the company as a whole, operating profit was Rs 2,290 cr, down from about Rs 2,920 cr in the preceding three months and Rs 3,215 cr a year ago.
However, being a highly leveraged company, Bharti Airtel also has steep interest payments.
Total, net interest costs for the March quarter came in at Rs 1,829 cr, down from 2,088 cr in the preceding three months. There was also an exceptional or one-time expenditure of Rs 325 cr.
As a result, the profit before tax fell to just Rs 117 cr from Rs 599 cr in the previous three months and Rs 646 cr in the same quarter a year ago.
Still, the company was able to avoid a loss at this level.
Moreover, the company also saw a tax write back due to the poor performance that it has seen in the last two-three quarters. Due to the poor performance, the total tax liability for the full year is below what was expected, and some of the money that was set apart for tax payments could be added back to the company’s profit and loss account.
During the March quarter, Airtel had a net writeback of Rs 302 cr in terms of tax, thus lifting its net profit to Rs 419 cr, a far cry from the losses anticipated by the Street.
In fact, the number was comparable to the Rs 471 cr net profit that it posted a year ago.