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Bharti Airtel profit down 75%, says market remains “turbulent”

Bharti Airtel Limited reported a drop of 14% in its revenue for the first quarter, at Rs 21,958 crore. Adjusted for sale of its units, the drop was 11%, it said.

Net profit fell 75% to 367 crore rupees for the first quarter. Operating profit was down 18%.

India revenues for Q1’18 at Rs 17,244 crore have declined by 10.0% Y-o-Y primarily led by mobile drop of 14.1% Y-o-Y.

“Mobile market remains turbulent in the current quarter as well, due to disruptive pricing by a new operator,” Airtel said.

Consolidated mobile data revenues for the quarter was at Rs 3,765 crore, Y-o-Y drop of 16.8% on an underlying basis.

“The pricing disruption in the Indian telecom market caused by the entry of a new operator continued with industry revenues declining over 15% Y-o-Y, creating further stress on sector profitability, cash flows and leverage,” said Gopal Vittal, MD and CEO, India & South Asia,

“Consequently, our revenues declined 10% and EBITDA margin eroded by 5.3% Y-o-Y. We remain committed to providing the best value & experience to our customers and continue to invest towards it.

“As a result, our network witnessed data and voice traffic growth of 200% & 34% Y-o-Y respectively. We also added 5.2 Mn data customers in the last quarter – our highest ever.”

Mobile data traffic has grown three fold to 472 Bn MBs in the quarter as compared to 158 Bn MBs in the corresponding quarter last year.

Mobile broadband customers increased by 33.7% to 48.9 Mn from 36.6 Mn in the corresponding quarter last year.

PROFIT

Consolidated EBITDA at Rs 7,823 crore declined 18.4% Y-o-Y with EBITDA margin dropping by 1.9% to 35.6%, led by India margin drop of 4.6% Y-o-Y on an underlying basis.

Consequently, the consolidated EBIT dropped by 34.1% Y-o-Y to Rs 2,988 crore.

Forex and derivative loss for the quarter was at Rs 39 crore compared to loss of Rs 309 crore in the corresponding quarter last year. The Consolidated Net Income after exceptional items for the quarter stands at Rs 367 crore (Q4’17: Rs 373 crore) compared to Rs 1,462 crore in corresponding quarter last year.

Net interest costs of Rs 1,789 crore have risen from Rs 1,631 crore in the corresponding quarter last year – largely due to increased spectrum related interest costs.

The company’s consolidated net debt has decreased to Rs 87,840 crore from Rs 91,400 crore in the previous quarter.

Net debt excluding the deferred payment liabilities to the DOT and finance lease obligations has decreased by Rs 4,633 crore sequentially in the quarter.

Net debt to EBITDA ratio (LTM) for the quarter has remained flat at 2.67 times (vs 2.63 times in the previous quarter).

Lower EBITDA along with rising spectrum interest and amortization costs has resulted in deterioration of Return on Capital Employed (ROCE) to 5.6% from 7.6% in the corresponding quarter last year.

AFRICA

In constant currency (1 Mar’17) terms, Africa underlying revenues grew by 1.5% Y-o-Y.

Data revenues at $ 138 million grew by 11.3% Y-o-Y, led by increase in Data customer base by 19.4% and traffic by 75.0%. Data revenues now contribute to 18.7% of overall Africa revenues vis-à-vis 16.9% in the corresponding quarter last year.

“Our continuous focus on costs and efficiencies has resulted in significant improvement in underlying EBITDA margin by 8.1% Y-o-Y and is at 28.0%,” the company said.

Raghunath Mandava, MD and CEO, Africa, said: “Airtel Africa organic revenue growth for the quarter was 1.5% Y-o-Y, though our efforts to optimize unprofitable revenue streams resulted in higher net revenue growth of 3.3%. New KYC norms impacted customer additions and consequently revenue growth in the quarter.

“The data story in Africa is unfolding well with consumption and revenue increasing by 75% & 11.3% respectively on a Y-o-Y basis. Our focus to deliver a more profitable business model for Africa has resulted in another quarter of EBITDA margin improvement, with underlying margins expanding by 8.1% Y-o-Y from 19.9% to 28.0%.”

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