Bharti Airtel continued to show B sequential improvement in profitability. The company recently announced its first quarter results for financial year 2006-07.
During April-June 2006, the company registered a total revenue of Rs 38.56 billion, which is 53 per cent higher than the corresponding quarter of the previous year. Mobile operations contributed 74 per cent to the total revenue while broadband and telephony operations contributed 13 per cent. About 23 per cent was accounted for by enterprise services.Eliminations on behalf of inter-segment transactions constituted 10-11 per cent.
The company registered a 48 per cent increase in net profits at Rs 7.5 billion over the corresponding period last year. Its total assets at the end of June 2006 stood at Rs 242.26 billion. The debt-equity ratio has come down over the past few years to 0.42. The foreign shareholding in the company at the end of the quarter was 47.98 per cent.
Commenting on the company’s results and performance for the quarter, Sunil Bharti Mittal, chairman and managing director, said: “The domestic telecom sector continues to demonstrate strong growth led by the mobile segment.It has crossed the 100 million subscriber mark in the past quarter. The company has started the year well with strong operational and financial performances and under the new management structure, we are confident that the growth momentum would be sustained.”
Bharti’s topline growth was facilitated by a robust increase in the subscriber base compared to the same period last year.The total customer base at the end of the quarter stood at 24.57 million, including 23 million mobile users and over 1.5 million fixed line customers (broadband and telephone services). This represents a growth of 86 per cent over the same quarter last year and a 17 per cent growth over the January-March 2006 quarter. The mobile subscriber base registered an 18 per cent growth while the fixed line segment saw a 12 per cent increase over the previous quarter. Due to an increase in its overall subscriber base, the operating margin during the quarter was also higher, at 39 per cent from 37.4 per cent in the same quarter of the previous year.
The surge in its mobile subscriber base has taken up its GSM market share to 22.5 per cent in June 2006 from 21.8 per cent in the previous quarter. Bharti’s share of the net additions during this period was 27 per cent.
The company, however, experienced a decline in its average revenue per user (ARPU) for GSM services ?? from Rs 491 in June 2005 to Rs 441 in June 2006. This was primarily due to lower tariffs.However, Bharti’s ARPU is still higher than the average ARPU of the private GSM sector at Rs 366. The monthly churn in its post-paid segment was 3.4 per cent and in the prepaid segment it was 4.7 per cent. It incurred a total capital expenditure of Rs 18 billion on mobile services during the quarter.
The ARPU for the fixed line segment was three times higher than for the mobile segment at Rs 1,202 per month. The company incurred a capital expenditure of Rs 3.9 billion on this segment during the quarter.
Bharti has a pan-Indian presence in the mobile market, currently providing services to 46 per cent of the population. The company set up an additional 4,000 base terminal stations this quarter, increasing the number of stations to 24,970 and town coverage to 4,026 census towns (and 101,614 non-census towns and villages). In the wireline space, it expanded its reach to two more cities, increasing its total to 92 cities and 16 circles. It also extended its optic fibre network by 2,116 route km to 35,016 route km.
During the quarter, the company went in for a change in name ?? from Bharti Tele Ventures to Bharti Airtel. It also launched fixed wireless phone services. In a recent move, Bharti has reportedly bid for Sri Lanka’s fifth mobile operator licence among other global telecom majors. The four operators offering GSM services in Sri Lanka are Mobitel (owned by the Sri Lankan government), Celltel Lanka, Telekom Malaysia (owned by Dialog Telecom) and Hutchison.
In the near future, factors that could further drive Bharti’s growth include a hike in the foreign holding limit to 74 per cent, higher subscriber additions and lowering of its revenue share by the government. On the other hand, growing competition and declining industry tariffs would continue to put a strain on its margins.
