industry

Airtel posts 1st consolidated loss in 14 years


KOLKATA: Bharti Airtel reported a consolidated net loss of Rs 2,866 crore in the April-June quarter, its first in 14 years, dragged by a one-time expense relating to 3G gear and a sharp increase in finance costs, even though India mobile services continued to show signs of a recovery with average revenue per user (ARPU) moving up sequentially for the second straight three-month period.

The Sunil Mittal-led telco’s net loss for the fiscal third quarter—compared to a Rs 97.3 crore net profit a year ago—came due to a Rs 1,445.4 crore exceptional hit, a 50% on-year jump in net finance costs to Rs 3,181.5 crore and a 31.4% jump in depreciation & amortisation costs to Rs 6,758.7 crore.

Bharti Airtel’s quarterly revenue from local mobile services was also higher at Rs 10,866.7 crore, up 2.2% sequentially and 4% on-year, while its overall India revenue rose 0.7% sequentially and nearly 3% on-year to Rs 15,344.6 crore, which analysts said signals the steady revival of the telco’s local mobile operations. Mobile services contributed around 71% of Airtel’s overall India quarterly revenue.

Thus, Reliance Jio Infocomm, which recently reported quarterly revenues of Rs 11,679 crore in the April-June period, has emerged the country’s largest mobile carrier by the parameter, pulling ahead of both Airtel and Vodafone Idea—Rs 11,269.9 crore—in the fiscal first quarter. Airtel though reported higher APRU’s than Jio—Rs 129, up 5.1% on quarter, to Rs122—for the first time since the Mukesh Ambani-owned telco started reporting results. Vodafone Idea’s ARPU was further back at Rs108.

“The first quarter has begun with healthy and equitable growth across all our lines of business and headline pricing has remained stable, albeit at low levels,” Gopal Vittal, CEO of Bharti Airtel (India, South Asia), said in a statement.

The telco’s consolidated revenue rose 5% on year and 0.6% on quarter, to Rs 20,737.9 crore, helped also by growth in India revenues. Bharti Airtel shares fell 4.10% to Rs 323.95 at the close on BSE Thursday, a day when the exchange’s benchmark index, Sensex, fell 462.80 points or 1.23%. The earnings were announced shortly after market hours.

“Bharti’s India business has done well, particularly the local wireless ARPUs, which have now improved two quarters back-to-back, driven by the `Airtel Thanks programme and its minimum recharge plans,” Rajiv Sharma, co-research head at SBICap Securities, said.

Airtel largely held on to its customers, with its India customer base falling marginally to 281.13 million from 282.64 million in the previous quarter. Its monthly churn was a tad lower at 2.6% from 2.8% in the quarter ended March, FY19.

Data usage per customer rose 8% sequentially to 11.9 GBs while voice minutes of usage increased 3.6% on-quarter to 888 minutes. By comparison, Jio monthly average data usage per user rose to 11.4 GB from 10.9 GB while voice consumption per user fell to 821 minutes a month from 823 minutes in the previous quarter.

“The numbers are positive and it looks like even in this murky environment, Bharti will rebound stronger. There is a one-time exception which has led to the loss but Ebidta is up, so is volumes and ARPU, even better than Jio’s, which means pricing is back for Bharti,” said Sanjeev Bhasin, EVP-markets & corporate affairs at India Infoline Ltd. “There may be knee-jerk reaction to the stock tomorrow but it may end in a 3-5% increase”.

Bharti Airtel took an exceptional hit (net of tax), primarily due to a Rs 142.7 crore charge towards accelerated depreciation of 3G network gear and operating costs on network refarming/upgradation, a Rs 1,586.3 crore incremental provision on account of derivative liabilities pertaining to customer indemnities given to investors of Airtel Africa Plc, including listing expenses, the company said.

Airtel’s consolidated earnings before interest, tax, depreciation & amortization (Ebitda) grew 24.2% on year, but was helped by the adoption of a new accounting standard for its lease of assets to the tune of Rs1,512 crore. Without the new standard, Ebitda would have grown 2% on year.

Quarterly Ebitda margin expanded to 41% compared from 33% in the previous quarter, also helped by the new standard, which lowers operating expenses. Excluding the new standard, margins would have been at 33.7% in the just ended quarter.

Essentially, Ind-AS 116 enables companies to recognise leases as assets in the balance sheet from April 1, 2019, and as such, the relevant lease rentals do not get reflected in the network opex but as an element of depreciation cost, in turn, pushing up the Ebitda.

Airtel’s total quarterly expenses came in at Rs 12,449.1 crore, down nearly 11% sequentially and 5% on-year.

Despite raising Rs 25,000 crore via a rights issue in May, the telco’s net debt was higher at Rs 1.16-lakh crore compared with Rs 1.12 lakh- crore at March end, and, combined with the new accounting standard, pushed up depreciation and amortization and finance costs.





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