Reliance Jio effect: Bharti Airtel Q4 net profit plunges 72% to Rs 373 cr

Bharti Airtel
Dragged down by rival Reliance Jio’s aggressive pricing strategy, telecom major Bharti Airtel on Tuesday reported a 72 per cent fall in net profits at Rs 373 crore for the fourth quarter ended March 31, a second consecutive quarterly decline.

The company had earned net profits of Rs 1,319 crore in the corresponding quarter of 2015-16. The mobile operator’s consolidated revenues were down 8.8 per cent year-on-year during the January-March period at Rs 21,935 crore.

“The sustained predatory pricing by the new operator has led to a decline in revenue growth for the second quarter in a row… The deteriorating health of the industry was compounded by the tsunami of incoming voice traffic from the new operator, as a result of which significant investments had to be made just to carry the incoming traffic on our network,” Gopal Vittal, managing director and chief executive officer, India & South Asia, said.

Reliance Jio launched its free voice and data plan in September last year, and extended it till March. It currently offers free voice services while its data tariffs are lower than those of the incumbents.

The telecom industry, which owes close to Rs 4.60 lakh crore to financial institutions and banks, has alleged that the predatory pricing by the new operator continues to impact the financial health of the sector.

Bharti Airtel’s average revenue per user (ARPU) declined 18 per cent to Rs 158 in the period, against Rs 194 in the same period in the previous financial year.

Data continued to cannibalise voice and it was evident in the decline of the voice ARPU to Rs 114 from Rs 138 in the January-March quarter in the previous financial year. Even though the data ARPU at Rs 162 was higher than voice, it was 17 per cent lower than the Rs 196 data ARPU in January-March 2016. 

Net subscriber additions by Airtel dropped nearly 1.5 per cent to 7.8 million as of March 31 from 7.9 million in the corresponding period of 2015-16.

During 2016-17, Airtel reported consolidated revenues at Rs 95,468 crore, up 1.1 per cent year-on-year (YoY), and net profits at Rs 3,799 crore, down by 37.5 per cent year-on-year. The company made two key strategic announcements during the quarter — the acquisition of Telenor India and agreement with Tikona Digital Networks to acquire its 4G business. The company stands to gain on the spectrum front from both the deals. 

While the acquisition of Telenor India would provide 43.4 megahertz (MHz) of additional airwaves in seven circles — Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East), Uttar Pradesh (West), and Assam — the definitive agreement with Tikona means 100 MHz spectrum in the 2,300 MHz band and 350 sites in five telecom circles — Gujarat, Uttar Pradesh (East), Uttar Pradesh (West), Rajasthan, and Himachal Pradesh. Meanwhile, in constant currency terms, underlying revenues in its African operations grew by 2.6 per cent year-on-year. Data revenues at $157 million grew by 14.5 per cent YoY, led by an increase in the data customer base by 19.3 per cent and traffic by 77 per cent. 

“Airtel Africa underlying revenues grew by 4.4 per cent in constant currency terms during FY17… Revenue market shares in our key geographies continue to accelerate. We remain focused on accelerating growth through improved customer experience and superior network quality,” Raghunath Mandava, managing director and chief executive officer, Africa.

The board of Bharti Airtel has proposed a final dividend of Rs 1 per share for 2016-17.

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