Bharti Airtel recently released its financial results for the quarter ended December 2019. The operator posted heavy losses for the third consecutive quarter owing to the overhang of adjusted gross revenue (AGR) dues to the government. However, all was not lost for the operator as its India and Africa operations registered an increase in revenue.
Consolidated net loss sinks further
The operator posted a consolidated net loss of Rs 10.35 billion, its third quarterly loss in 14 years. In contrast, it had posted a profit of Rs 0.86 billion during the quarter ended December 2018. Airtel attributed the loss to exceptional charges for licence fee and pending AGR dues pertaining to spectrum usage. However, the operator’s consolidated revenues increased 8.5 per cent, from Rs 202.31 billion during the quarter ended December 2018 to Rs 219.47 billion in the quarter ended December 2019. Further, its consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) grew significantly by a whopping 48.3 per cent, from Rs 63.06 billion to Rs 93.5 billion.
A ray of hope as India ARPU improves
In India, the company witnessed a 7 per cent increase in revenues from Rs 147.68 billion to Rs 157.97 billion. The increase was primarily driven by a rise in prepaid mobile revenue. The company witnessed a year-on-year growth of 9.6 per cent in mobile revenues led by a strong focus on quality customers, up-trading and the recent tariff hike although its full impact is yet to be seen. Consequently, the ARPU improved by 29.9 per cent from Rs 104 to Rs 135. The improvement was driven by the tariff hikes announced in December 2019, resumption of mobile services in some parts of the country and broadband customer additions. Airtel was in the lead in the ARPU metric. Further, the
EBITDA for Airtel’s India operations grew by 58 per cent from Rs 41.15 billion to Rs 65.01 billion during the same period.
Africa market registers double-digit revenue growth
In the Africa market, Airtel witnessed a year-on-year decline of 21 per cent in net profit from $133 million to $103 million. The decline could be attributed to soaring tax payments. However, revenues witnessed a 14 per cent growth from $785 million to $896 million, largely driven by the operator’s improved performance across the voice, mobile data and mobile money segments. According to Airtel, this was its eighth consecutive quarter of delivering double-digit revenue growth and EBITDA margin expansion in constant currency.
Operational metrics: Airtel’s expanding 4G subscriber base in the India market
During the quarter, Airtel’s total customer base increased by 3.7 per cent from 403.69 million to 418.81 million. While the South Asia market witnessed the maximum growth of 16.9 per cent in customer base from 2.51 million to 2.93 million, the customer base in the Africa market grew by 9.4 per cent from 97.9 million to 107.14 million. In India, the customer base grew by 1.8 per cent, from 303.26 million to 308.74 million. The most notable achievement remained a phenomenal rise in the 4G subscriber base. Airtel added a record 21 million 4G subscribers in a single quarter. Its 4G customer base grew by 60.6 per cent from 77.1 million to 123.8 million owing to the introduction of interconnect usage charges imposed by Reliance Jio for off-net calls, which led a large number of 4G users to switch to Airtel. With increased data penetration, the total data usage on Airtel’s network in India increased by 72.4 per cent from 3,217 PB to 5,547 PB. Further, mobile data usage per customer grew by 32.3 per cent, from 10.3 GB to 13.6 GB.
The way ahead
While Bharti Airtel was hopeful of receiving an extension for AGR payments, the Supreme Court’s order directing contempt proceedings against telcos for violating its order has come as a shock for the operator. Following the order, Airtel has paid Rs 100 billion to the government and has promised to pay the balance amount before March 17, 2020, the next date of hearing. The company has recently raised $3 billion through a combination of private placement of shares and an overseas sale of convertible bonds. It has also raised $250 million through its wholly owned subsidiary Network i2i Limited. It now needs to mobilise these funds within a limited time frame to pay its total AGR dues of Rs 355.86 billion.
By Kuhu Singh Abbhi