After registering declining profits for 15 straight quarters, Bharti Airtel re-ported an improvement in its bottom line for the three-month period ended December 2013. The company?s net profits in-creased by 115 per cent from Rs 2.84 billion in the quarter ended December 2012 to Rs 6.1 billion for the corresponding quarter in 2013. Profits increased primarily on account of a 13.17 per cent decline in net finance costs from Rs 12.31 billion to Rs 10.68 billion during this period. The operator also reduced its debt from Rs 583.93 billion as of end-December 2012 to Rs 576.43 billion as of end-December 2013. Meanwhile, the total revenue from operations grew by 13 per cent from Rs 193.62 billion for the quarter ended December 2012 to Rs 219.38 billion for the same quarter in 2013.
Indian operations continue to grow
During October-December 2013, Bharti Airtel?s revenues from its Indian operations stood at Rs 116.44 billion, accounting for 66 per cent of its overall revenues. The mobile service business contributed 81 per cent to the operator?s Indian revenues.
The operator?s voice service revenues rose by 10.63 per cent from Rs 85.61 billion for the quarter ended December 2012 to Rs 94.71 billion for the same quarter in 2013. This was on account of an increase in voice tariffs as well as the withdrawal of promotional offers and discounts during the second half of 2013. On the upside, despite the voice tariff hike, minutes on the network increased by 6 per cent from 240.81 billion during October-December 2012 to 255.03 billion during the same quarter in 2013.
Tariff rationalisation and higher voice service usage resulted in improved voice ARPUs, which grew by 5 per cent from Rs 153 for the quarter ended December 2012 to Rs 161 for the corresponding quarter in 2013. The increase in voice tariffs led to a higher realisation per minute, increasing by 6 per cent year on year to Re 0.37 per minute for the quarter ended December 2013.
Data services also witnessed significant traction during the quarter ended December 2013. The data customer base grew by 31 per cent year on year to 41.48 billion as of December 2013. The number of 3G subscribers increased by 83 per cent from 5.18 billion in December 2012 to 9.48 billion in December 2013, accounting for 17.46 per cent of the operator?s data users. Growth in the subscriber base along with a reduction in data tariffs led to improved service uptake. Data traffic on the network increased by 97 per cent from 19.7 billion MB during the quarter ended December 2012 to 38.96 billion MB in the corresponding quarter in 2013. Higher data traffic resulted in improved ARPUs, which grew from Rs 47 to Rs 75 during the period under review.
International operations witness strong growth
International operations accounted for 34 per cent of Bharti Airtel?s total revenues. While the voice service segment?s performance was weak in the African market, the data services business witnessed strong growth. Voice usage per customer declined by 2 per cent year on year to 141 minutes during the quarter ended December 2013, which led to a 12 per cent decline in ARPU from $5.3 to $4.7.
Data services contributed 7.4 per cent of mobile revenues during the quarter ended December 2013, as compared to 3.9 per cent during the same quarter in 2012. The data subscriber base grew by 39 per cent from 14.1 million to 19.63 million during this period and data usage on the company?s network more than doubled. This resulted in a year-on-year ARPU growth of 39 per cent from $1.1 to $1.6.
In South Asia, the company performed better in the voice service segment, where the ARPU and realisation per minute increased by 7 per cent and 8 per cent year on year to $2.4 and $0.57 respectively for the quarter ended December 2013. Bharti Airtel witnessed 28 per cent growth in data usage per customer during the review period. However, its efforts to increase 3G penetration in Bangladesh were impacted by political uncertainty. This led to a 6 per cent decline in ARPU to $0.6 and a 27 per cent decline in realisation per MB to $0.32 during the quarter ended December 2013.
Future outlook
Bharti Airtel?s performance in the Indian market is expected to remain strong in the next few quarters, driven by an increase in data service uptake and tariff rationalisation in the voice service segment. The company?s efforts to pare debt will also help it reduce interest costs in the future.
On the international operations front, the African market is currently undergoing an important change in terms of operations and management. Further, greater political stability is expected in the African countries, which will benefit the company.
