Airtel Q2 profit plunges 76.5% to Rs 343 cr on tariff wars

Bharti Infratel

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

The company has posted net profit of Rs.1203.8 crores for the 6 months period ended September 30, 2017 as against Rs.3099.3 crores for the 6 months period ended September 30, 2016.

India business revenue during the quarter dropped 5.2 percent sequentially to Rs 12,245 crore and EBITDA slipped 5 percent to Rs 4,208.7 crore due to pricing pressure, but margin increased 10 basis points to 34.4 percent.

Going forward, the company has warned that financial stress in the sector not only continued but will also be "further accentuated" during the October-December quarter on account of the reduction in interconnect usage charges (IUC).

He added that this would eventually force operator consolidation and exits as witnessed in the recent past.

The consolidated revenues of the company spanning 17 countries - India, Sri Lanka and 15 in Africa - declined 11.7 per cent to Rs 21,777 crore for the reported period as compared to Rs 24,652 crore past year.

India revenues for September quarter at Rs 16,728 crore declined 13 per cent year-on-year, caused primarily by mobile revenue drop of 16.8 per cent.

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Mobile market continues to experience value erosion and financial stress led by competitive pressures, Airtel mentioned in the statement. Our efforts to create a profitable business model for Africa continues and we have delivered EBITDA margin of 32.1 percent, with underlying margins up 9.1 percent Y-o-Y.

The fall in rates resulted in a four-fold growth in mobile data traffic from a year earlier while mobile broadband users increased almost 34% on year, now forming 23.3% of the user base compared with 22.3% at June end.

Airtels consolidated net debt rose to Rs 91,480 crore against Rs 87,840 crore in the previous quarter.

The Sunil Mittal-led company, in a separate statement, confirmed that it has been approached by global investors for "a significant stake" in its mobile tower arm Bharti Infratel, which if accepted, will see the investors acquiring control of the subsidiary.

Bharti Airtel shares gained 1% to Rs 497.65 at the close on the BSE on Tuesday. Its overall subscriber base in India marginally increased by 0.5% in the second quarter to reach 282 million with 96.5% VLR.

Raghunath Mandava, MD, and CEO, Africa, said: "Airtel Africa underlying revenues grew by 2.8 percent Y-o-Y with net revenues growing 6.3 percent on the back of the increase in data penetration". Foreign exchange and derivative loss for the quarter was Rs 422 crore compared to loss of Rs 302 crore in the corresponding quarter past year.

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