Bharti Airtel Q2 net profit dips 76.5%

The quarter that ended on September 30, 2017 saw the net profits of country's largest telecom company nosediving to Rs 343 crore, a decline of 76.5 per cent in comaprison to the same quarter in the corresponding year.

Mayuresh Joshi, Angel Broking fund manager and sector expert, wasn't surprised by the sharp drop in Airtel's net profit, "as the July-September period is, typically, a seasonally weak quarter".

Consolidated net profit of Bharti Airtel, backed by Southeast Asia's largest telecom company Singapore Telecommunications, stood at 3.43 billion rupees ($53 million), compared with 14.61 billion rupees a year earlier.

India's telecom industry is roiled by a price war triggered by the entry of billionaire Mukesh Ambani's wireless venture Jio in September a year ago. Consequently, its net debt excluding the deferred payment liabilities to the Department of Telecommunications and finance lease obligations increased by Rs 2,554 crore sequentially in the quarter.

According to analysts, interconnect charges now account for 12 per cent of Airtel's operating profit.

The company said that the mobile data traffic grew four- fold in the quarter in India, and the mobile broadband customers rose by 33.6 per cent to 55.2 million.

In fact, net profit before exceptional items for India came in at Rs 121.4 crore, compared with Rs 306.7 crore for Airtel's Africa operations, underlining the pressures on the local operations, while operations in Africa show continued signs of improving, say analysts.

Average revenue per user (ARPU) fell 6% to Rs 145 in Q2 FY18.

"The financial stress in the industry continues due to double digit revenue decline and will be further accentuated by the reduction in IUC rates in the next quarter", said Gopal Vittal, MD and CEO, India & South Asia.

"This will eventually force operator consolidation and exits as we have witnessed in the recent past". The merger will potentially create the biggest Indian telecoms company, surpassing Airtel, which recently increased its customer base with its acquisition of the Tata conglomerate's consumer mobile business.

The shares of the company closed at Rs 497.65 a piece, up by 0.98 per cent, on BSE.

Consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) at Rs 8,004 crore declined 15.4 per cent year-over-year and Ebitda margin dropped 1.6 per cent to 36.8 per cent over the same period. Foreign exchange and derivative loss for the quarter was Rs 422 crore compared to loss of Rs 302 crore in the corresponding quarter previous year.

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