Bharti Airtel Ltd Q2 net profit drops to Rs. 586.1 crores

Bharti Airtel Ltd Q2 net profit drops to Rs. 586.1 crores

Bharti Airtel Ltd Q2 net profit drops to Rs. 586.1 crores

Separately, Bharti Infratel on Monday reported a 17 percent drop in second-quarter profit to 6.38 billion rupees, missing analysts' estimate of 7.41 billion rupees.

The consolidated revenues of the company spanning 17 countries - India, Sri Lanka and 15 in Africa - declined 11.7 per cent to Rs 21,777 crore for the reported period as compared to Rs 24,652 crore a year ago.

Its India operations continued to suffer as revenues dropped 13% to Rs 16,728 crore on an year-on-year basis.

Bharti Airtels net interest costs increased to Rs 1,905 crore (Rs 1,603 crore in the same quarter last year) on account of lower investment income. These factors will eventually force consolidation among operators and exits as the industry has witnessed in the recent past, he added.

Raghunath Mandava, MD and CEO, Africa, said, "Airtel Africa underlying revenues grew by 2.8% Y-o-Y with net revenues growing 6.3% on the back of increase in data penetration". "Total MBs on the network saw a whopping 65.9 percent increase quarter-on-quarter at 783.8 billion minutes and data usage per customer for the quarter stood at 4,087 MB, higher by 56.5 percent QoQ", Bharti said.

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Bharti Airtel, along with other incumbent telecommunication service providers, has been engaged in a fierce tariff war with Mukesh Ambani-controlled Reliance Jio. Jio's rivals - forced to slash effective data rates and offer free voice calling on some plans across price segments - have seen a key operational indicator - average revenue per user (ARPU) - crash over the past year or so.

Airtel's second quarter net profit of 3.43 billion rupees ($53 million) was its smallest profit in 19 quarters and its sixth consecutive drop in quarterly profit. "Airtel remains committed to its goal of increasing revenue market share in this competitive environment". Jio, which reported its results for the first time earlier this month, reported ARPU of Rs 156.4, now the highest in the industry.

Interestingly, for Airtel, its Africa market fared better with revenue rising 2.8 per cent on an underlying basis, while the operating profit margins improved over 9 per cent year-on-year buoyed by "continuous cost control initiatives".

The stock already reacted to positive news flow (acquisition of consumer telecom business of Tata Teleservices, likely tower deals and hope of tariff rate stabilisation), he said.

Mayuresh Joshi, Angel Broking fund manager and sector expert, wasn't surprised by the sharp drop in Airtel's net profit, "as the July-September period is, typically, a seasonally weak quarter".

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