Bharti Airtel has reported a decline in its bottom line for the three-month period ended September 2013. The company?s profits decreased by 29 per cent from Rs 7.21 billion for the quarter ended September 2012 to Rs 5.12 billion for the same quarter in 2013. The decline in profitability occurred on account of high interest costs and high tax expenses. While interest costs grew by 74.17 per cent to Rs 16.11 billion for the quarter ended September 2013, tax expenses increased by 20 per cent to Rs 8.63 billion.
The high interest costs were attributed to forex and derivative losses of about Rs 3.42 billion, which were a result of a 5.2 per cent decline in the rupee vis-?-vis the US dollar. However, the higher profits during the July-September 2012 quarter were largely due to a one-time income (Rs 5.86 billion) resulting from a judgment regarding the interconnect agreement by the Telecom Disputes Settlement and Appellate Tribunal. After adjusting for this income, Airtel?s profits increased by 13.2 per cent year-on-year for the quarter ended September 2013.
Meanwhile, the total revenues grew by 9.9 per cent from Rs 193.99 billion for the quarter ended September 2012 to Rs 213.24 billion for the same quarter in 2013.
Growth in Indian mobile operations
Service revenues from the Indian business increased by 6.08 per cent from Rs 132.71 billion for the quarter ended September 2012 to Rs 140.79 billion for the corres-
ponding quarter in 2013. The increase in revenues was attributed to the withdrawal of promotional offers in early 2013. The earnings before interest, taxes, depreciation, and amortization margin also grew from 32.6 per cent to 34.8 per cent.
On the operational front, Bharti Airtel registered steady growth across parameters. The ARPU increased from Rs 177 during July-September 2012 to Rs 192 during the same quarter in 2013. In the voice service segment, minutes of usage (MoUs) grew by 7.3 per cent from 234.22 billion to 251.33 billion, leading to a 8.1 per cent increase in voice ARPUs from Rs 148 to Rs 160.
Also, the data service segment continued to perform strongly. The subscriber base increased from 40.6 million in September 2012 to 50.63 million in September 2013. Of the total data subscribers, 8.01 million (15.82 per cent) were 3G users as of September 2013. Further, data usage per customer increased from 133 MB during July-September 2012 to 231 MB during the corresponding quarter in 2013, thus resulting in an ARPU growth from Rs 43 to Rs 70. The segment?s contribution to overall revenues also increased from 5.2 per cent to 9.2 per cent, while that of value-added services (VAS) decreased by 3.4 percentage points to 6.7 per cent.
Promising future for international operations
The company?s African operations registered a 2 per cent increase in net revenues from $1.09 billion for the quarter ended September 2012 to $1.11 billion, largely driven by growth in the data service segment. Bharti Airtel?s data subscriber base grew by 26 per cent from 13.93 million to 17.53 million. Besides, data usage per customer witnessed a 97 per cent year-on-year increase to 4.21 billion MB during the quarter under review, resulting in 46 per cent growth in data ARPU to $1.5.
The voice service segment, however, witnessed negative growth. The voice ARPU decreased by 15 per cent from $5.5 during July-September 2012 to $4.7 during the same quarter in 2013.
In contrast, the South Asian business, comprising operations in Bangladesh and Sri Lanka, posted healthy growth in both the voice and data service segments. The overall ARPU grew by 17 per cent from $2.5 for the quarter ended September 2012 to $3 for the corresponding quarter in 2013. The voice ARPU in the South Asian region increased from $2.2 to $2.5 during this period, aided by a 21 per cent rise in MoUs to 10.67 billion for the three-month period ended September 2013. Interestingly, the VAS segment continued to grow in the region despite the emergence of over-the-top applications and contributed about 7.2 per cent to the operator?s mobile revenues from the South Asian region during July-September 2013, as compared to 6.1 per cent during July-September 2012.
Future outlook
In all, Airtel?s performance during July-September 2013 was better than expected. However, the company needs to reduce its debt burden, encourage 3G service uptake and improve operational efficiency. Meanwhile, sector developments such as a decline in market competition and tariff rationalisation have augured well for Airtel and will facilitate future growth. Therefore, the near-term outlook remains positive, but the company?s long-term position will depend on its ability to generate returns on investments in the African market.
