Bharti Airtel sees continued improvement, revenue up 2.3%, DTH ARPU down 33%

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Bharti Airtel’s India numbers indicated that the company did indeed hit the bottom in the December quarter of last year, and continued to improve its numbers from then on.

Airtel, which had seen its India revenue fall to Rs 14,768 cr in the December quarter, had improved it to Rs 15,241 cr in the quarter ended March. The improving trend continued in the latest quarter that ended in June.

India revenue for the June quarter came in at Rs 15,345 cr, up by 0.6%, compared to the March quarter.

While the growth may not have been very strong, it nevertheless indicates that the company is able to prevent a back-slide in its financial condition that had taken a knock following the entry of Reliance Jio into the market.

Another key takeaway from Bharti Airtel’s India numbers were a strong improvement in its operating margins.

The company, however, said that with the adoption of IndAS 116, effective April 1, 2019, the results and ratios for the quarter ended June 30, 2019 are not comparable with previous periods.

The company slashed its operating expenses by a whopping 20.3% on quarter to Rs 5,709 cr — a fall of Rs 1,455 cr, going by the numbers as given.

This was more than enough to offset an increase of Rs 105 cr in access charges — the money paid by the company as ‘termination fees’ to other networks to complete the calls made by its subscribers.

Thanks to the sharp fall in expenses, Bharti Airtel’s India EBITDA or operating profit jumped sharply to Rs 6,063 cr from Rs 4,647 cr.

This is the best EBITDA number for the India operations posted by the company is well over a year.

Thanks to this, the company was able to report a profit at the EBIT (or profit before interest and tax) for the first time in one year.

The company had EBIT of Rs 255 cr for the June quarter, versus a loss of Rs 90 cr in the March quarter and a loss of Rs 524 cr in the December quarter.

However, high finance related costs pushed Bharti Airtel’s India operations into a pre-tax loss of Rs 2,012, compared with 1,954 cr in the March quarter and Rs 1,541 cr in the December quarter.

On a net level too, the India operations continued to be under water to the extent of Rs 1,356 cr, compared to Rs 1,283 cr in the preceding quarter and Rs 972 cr in the December quarter.

MOBILE SERVICES

The turnaround was visible in mobile services numbers as well.

India mobile services revenue increased to Rs 10,867 cr from 10,632 cr in the March quarter and Rs 10,189 in the December quarter — which formed the bottom.

EBIT from mobile services was a loss of Rs 1,242 cr, versus a loss of Rs 1,378 cr in the March quarter and Rs 1,903 cr in the December quarter.

The company lost 1.5 million mobile users during the quarter, and had a churn of 2.6% per month, or about half that of Vodafone Idea for the same quarter.

Average revenue per user or ARPU increased to Rs 129 from Rs 123 in the March quarter, and Rs 104 in the December quarter.

The company added about 8.4 million new 4G users during the quarter, taking the total to 95 million.

DTH

The company saw a sharp decline in its monthly revenue from DTH due to reporting changes.

“Subsequent to the new tariff order (NTO), the service providers are responsible only for re-transmission and are not in a position to control content and pricing. Accordingly, the Gross revenue is only to the extent of net value retained i.e. customer payments received net of broadcaster’s fee (erstwhile content charges),” it said.

ARPU in the DTH business fell to Rs 157 per month in the latest quarter, down from 233 per month in the preceding quarter.

Total revenue of the DTH business was sharply down at Rs 739 cr from Rs 1051 cr in the preceding three months and Rs 1,033 cr in the December quarter.

However, said Airtel, the change is due to a change in the way revenue is being reported. Without this change, said the company, revenue would have been at Rs 1,148 cr.

On the other hand, here too the company was able to show better margins, possibly because of the new accounting method, aided by the new tariff system.

EBIT, or profit before interest and tax, jumped to Rs 244 cr for the June quarter from Rs 192 cr in the preceding period, but was down from Rs 327 cr in the December quarter. In the year-ago quarter, DTH EBIT was Rs 181 cr.

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