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    Airtel Q1 net profit flat on year; ARPU rises to Rs200 vs Rs193 in Q4

    Synopsis

    Bharti Airtel, a leading Indian telecommunications company, saw its Q1 net profit rise by 0.3% YoY, thanks to strong 4G user additions and data consumption growth. Consolidated revenue grew by 14.1% YoY to INR37.4bn ($552m), although net profits fell sequentially

    Airtel Q1 net profit flat on year; ARPU rises to Rs200 vs Rs193 in Q4ETMarkets.com
    Bharti Airtel’s consolidated net profit for the first quarter was flat on-year, and down more than 46% sequentially, dragged by a hefty exceptional loss caused due to a currency devaluation in Nigeria, even as the absence of tariff increases and aggressive 5G expansion for its India mobile business weighed.

    Airtel’s consolidated net profit fell sequentially to Rs 1,612.5 crore, dented by losses at its Africa unit. As a result, the telco, in which SingTel owns nearly 30%, missed estimates as analysts had pencilled in a net profit in excess of Rs 2,355 crore.

    Net income (before exceptional items) was up 91% on-year and 12% on-quarter at Rs 2,902 crore.

    “After accounting for a loss of Rs 1,289.6 crore toward exceptional items (net of tax and non-controlling interests), the resultant net income for the quarter ended June 30 came in at Rs 1,612.5 crore,” Airtel said in its earnings statement on Thursday.

    The exceptional loss, it said, was caused by a Central Bank of Nigeria decision to make changes to operations in the Nigeria Foreign Exchange Market, which devalued the naira against the US dollar by roughly 62%.

    Consolidated net debt, including lease obligations, stood at Rs 2.07 lakh crore.

    Airtel recently prepaid Rs 8,024 crore to the Department of Telecommunications (DoT), clearing a sizable chunk of the dues for airwaves bought in a 2015 auction. This will help the telco save on interest costs annually and boost cash flows as it rapidly rolls out 5G networks.

    The Sunil Mittal-led company reported robust 4G user and postpaid customer additions and decent data consumption growth.

    Record Per User Revenue
    Consolidated revenue expanded 14.1% on-year and 4% sequentially in April-June to Rs 37,440 crore, helped by over 3.6% sequential growth in average revenue per user (ARPU) — a key performance metric — to Rs 200.

    “Our consolidated revenue grew sequentially by 4%, and Ebitda margin expanded to 52.7%, underscoring the simplicity and execution of our strategy…our focus on winning quality customers and driving premiumisation helped us add 5.6 million 4G customers and the highest-ever postpaid customers in any one quarter,” Airtel managing director Gopal Vittal said in an official statement on Thursday.

    He added that Airtel exited the quarter with an industry leading ARPU.

    The company added 800,000 postpaid users in April-June, its highest ever, boosting its postpaid base to 40.4 million (including Internet of Things connections).

    Airtel shares retreated 0.66% to Rs 871.95 on the BSE on Thursday. Earnings were announced shortly after market hours.

    The company’s India mobile revenue – which contributes around 77% to the total — grew 4.31% sequentially and 12% on-year in the first quarter to Rs 20,392.4 crore. This was helped by ARPU growth, on the back of decent postpaid user additions as well as a pick-up in 2G-to-4G conversions. This was Airtel’s 11th successive quarter in the black after six straight losses earlier.

    Separately, Vittal said Airtel’s homes, enterprise and digital businesses also continued to exhibit strong growth momentum, reflecting the resilience and strength of its overall portfolio.

    Last month, larger rival Reliance Jio reported a 12.18% on-year increase in net profit for the June quarter to Rs 4,863 crore on a 9.9% on-year growth in revenue from operations to Rs 24,042 crore. It added 9.2 million subscribers, taking its total subscriber base to 448.5 million as of end-June, and its ARPU grew around 1% sequentially to Rs 180.5.

    In the just-ended quarter, Airtel added 3.15 million mobile users to end with 338.56 million subscribers. Monthly churn was unchanged at 2.8%, despite costlier mobile services across its 22 circles after the hike in base prepaid rates.

    Airtel, though, added fewer 4G users (5.62 million) in the June quarter than Jio’s 9.2 million additions in the same period.

    Currency Impact
    Analysts said the impact of the Nigerian currency devaluation is likely to weigh on Airtel’s consolidated earnings numbers in the September quarter too.

    “On a consolidated level, this is perhaps among the weakest performances in the past 10-odd quarters, as the sharp sequential fall in Airtel’s PAT is heavily impacted by the Africa business, and this impact is likely to continue into Q2 of FY24, but not beyond it,” said the sector analyst, who did not wish to be named.

    The company also reported an 8.5% on-year growth in average data usage per customer to 21.1 GB, which was also higher than the 20.3 GB in the March quarter, FY23. Voice usage per user also rose 3.1 % on-year and 1.4 % sequentially to 1,138 minutes.

    Overall, Airtel ended the June quarter with nearly 382.86 million customers, including fixed broadband, DTH and enterprise. Including other geographies like Africa, the company’s consolidated user base stood at 528.97 million.

    Airtel India’s wireless operating margins grew 1.85% sequentially to 54.8%.

    The company has been rapidly expanding its 5G network since last October. It is estimated to have rolled out 5G services in more than 5,000 cities/towns, and plans to cover all of India by this December.

    Airtel’s quarterly India mobile capex spends jumped almost 18% sequentially to Rs 7,829 crore, amid the telco’s ongoing pan-India 5G rollouts.
    airtel




    ( Originally published on Aug 03, 2023 )

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    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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