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Bharti Airtel posts consolidated net loss of Rs 2,866 crore

Bharti Airtel reported a consolidated net loss of Rs 2,866 crore in the April-June quarter, its first in 14 years, dragged by a one-time expense relating to 3G gear and a sharp increase in finance costs, even though India mobile services continued to show signs of a recovery with average revenue per user (ARPU) moving up sequentially for the second straight three-month period.

The Sunil Mittal-led telco’s net loss for the fiscal third quarter-—compared to a Rs 97.3 crore net profit a year ago—came due to a Rs 1,445.4 crore exceptional hit, a 50 per cent on-year jump in net finance costs to Rs 3,181.5 crore and a 31.4 per cent jump in depreciation & amortisation costs to Rs 6,758.7 crore.

Bharti Airtel’s quarterly revenue from local mobile services was also higher atRs 10,866.7 crore, up 2.2 per cent sequentially and 4 per cent on-year, while its overall India revenue rose 0.7 per cent sequentially and nearly 3 per cent on-year to Rs 15,344.6 crore, which analysts said signals the steady revival of the telco’s local mobile operations. Mobile services contributed around 71 per cent of Airtel’s overall India quarterly revenue.

Thus, Reliance Jio Infocomm, which recently reported quarterly revenues of Rs 11,679 crore in the April-June period, has emerged the country’s largest mobile carrier by the parameter, pulling ahead of both Airtel and Vodafone Idea—Rs 11,269.9 crore-—in the fiscal first quarter. Airtel though reported higher APRU’s than Jio—Rs 129, up 5.1 per cent on quarter, to Rs 122—for the first time since the Mukesh Ambani-owned telco started reporting results. Vodafone Idea’s ARPU was further back atRs 108.

Airtel snip 1

“The first quarter has begun with healthy and equitable growth across all our lines of business and headline pricing has remained stable, albeit at low levels,” Gopal Vittal, CEO of Bharti Airtel (India, South Asia), said in a statement.

The telco’s consolidated revenue rose 5 per cent on year and 0.6 per cent on quarter, to Rs 20,737.9 crore, helped also by growth in India revenues. Bharti Airtel shares fell 4.10 per cent to Rs 323.95 at the close on BSE Thursday, a day when the Sensex fell 462.80 points or 1.23 per cent. The earnings were announced shortly after market hours.

“Bharti’s India business has done well, particularly the local wireless ARPUs, which have now improved two quarters back-to-back, driven by the ‘Airtel Thanks’ programme and its minimum recharge plans,” Rajiv Sharma, co-research head at SBICap Securities, said.

Airtel largely held on to its customers, with its India customer base falling marginally to 281.13 million from 282.64 million in the previous quarter. Its monthly churn was a tad lower at 2.6 per cent from 2.8 per cent in the quarter ended March, FY19.

Data usage per customer rose 8 per cent sequentially to 11.9 GBs while voice minutes of usage increased 3.6 per cent on-quarter to 888 minutes. By comparison, Jio monthly average data usage per user rose to 11.4 GB from 10.9 GB while voice consumption per user fell to 821 minutes a month from 823 minutes in the previous quarter.

“The numbers are positive and it looks like even in this murky environment, Bharti will rebound stronger. There is a one-time exception which has led to the loss but Ebidta is up, so is volumes and ARPU, even better than Jio's, which means pricing is back for Bharti,” said Sanjeev Bhasin, EVP-markets & corporate affairs at India Infoline Ltd. “There may be knee-jerk reaction to the stock tomorrow but it may end in a 3-5 per cent increase”.

Bharti Airtel took an exceptional hit (net of tax), primarily due to a Rs 142.7 crore charge towards accelerated depreciation of 3G network gear and operating costs on network refarming/upgradation, a Rs 1,586.3 crore incremental provision on account of derivative liabilities pertaining to customer indemnities given to investors of Airtel Africa Plc, including listing expenses, the company said.

Airtel’s consolidated earnings before interest, tax, depreciation & amortization (Ebitda) grew 24.2 per cent on year, but was helped by the adoption of a new accounting standard for its lease of assets to the tune of Rs 1,512 crore. Without the new standard, Ebitda would have grown 2 per cent on year.

Quarterly Ebitda margin expanded to 41 per cent compared from 33 per cent in the previous quarter, also helped by the new standard, which lowers operating expenses.

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