New Delhi: The country's largest mobile operator Bharti Airtel on Wednesday reported 15th consecutive quarter of fall in profits with a 29 percent slump in September quarter but a better operating margin brings hopes that the worst may be over for the industry.
Profit dropped to Rs 512 crore in the quarter ended September 30 from Rs 721.2 crore a year earlier, mainly on account of increase in finance costs and forex losses due to rupee depreciation, the company said in a BSE filing.
"The continued depreciation of the Indian rupee has resulted in forex restatement and derivative losses of Rs 342 crore versus Rs 25 crore loss for Q2 FY13," the company said.
The margin of earnings before interest, tax, depreciation and amortisation, or EBITA, was 32 percent in the quarter compared with 30.6 percent a year ago.
"We are seeing some kind of positive movement on the Indian front and it continues to be a very dynamic industry," Bharti's Group Chief Financial Officer Sarvjit Singh Dhillon said at a press conference here.
He said that with certain initiatives in the past few months, especially by the Telecom Regulatory Authority of India on spectrum pricing, auctions, trading and other proposals, there is a positive movement to bring this sector back at what it was 4-5 years ago.
He, however, said the industry still faces regulatory hindrances on issues related to one-time fee, taxes, penalties and 3G roaming.
Airtel shares gained 5.23 percent to Rs 359.05 at the close on the BSE.
Consolidated revenue grew 10 percent to Rs 21,342.8 crore from Rs 19,408.5 crore a year earlier.
Airtel is betting big on data after revenue from the mobile Internet segment doubled to Rs 1,503 crore from a year earlier, accounting for 39.1 percent of the overall incremental revenue.
The company last month increased mobile Internet rates by about 25 percent and reduced benefits under certain schemes by about 50 percent. For voice services, Airtel cut back on discounted minutes, helping to increase realisations.
Hinting at further rate hikes, Airtel's Joint Managing Director and CEO Gopal Vittal said, "Tariffs today in this country are at absolutely unsustainable levels."
He, however, said that while the company has not increased headline tariffs till now, it will look at improving realisation rates by cutting discounts.
"On a secular basis, there is no other way but for these rates to increase. We still believe there is lot of headroom to cut back on discounts and improve realisation. As of now, we haven't touched the headline rates," he added.
Bharti Airtel added about 25 lakh mobile users in the country during the quarter for a total of 19.34 crore subscribers at the end of September.
Monthly churn or attrition of users improved to 3.2 percent from 8.5 percent in the same period last year.
"One of the things that we are pleased about is the fact that our churn has been controlled and our churn today is at 3.2 percent which is a very low level compared to many other operators," Vittal said.
The voice usage per customer increased by 20 minutes per month to 437 minutes in the quarter from 417 minutes in the second quarter of FY'2013.
Airtel's data usage per customer increased by 98 megabytes to 231 MBs in the quarter from 133 MBs a year ago.
The average revenue of the company per customer moved up by Rs 15 to Rs 192.
International revenue increased 17.9 percent on a yearly basis in rupee terms, with Africa growing by 16.1 percent Y-o-Y and South Asia by 54.4 percent.
The net loss for its African region widened to USD 105 million from USD 97 million in the same quarter a year ago.
Africa revenue increased 2 percent to USD 1,119 million from USD 1,097 million.
"Airtel Africa as a market has come back to growth. We have had a couple of weak quarters of market growth and now growth is back. I believe the customer base is growing well, rates are stable, ARPUs are higher, mobile Internet and m-commerce businesses are picking up," Bharti Airtel CEO (International) and Joint MD Manoj Kohli said.
He said in Africa, data revenue has grown by over 90 percent in the past year and the data customer base is 17.5 million. As of September 30, Airtel had an aggregate customer base of 66.4 million in Africa.
"Fundamentally the 19 international markets we have are exhibiting strong growth. The market grew in the last three years by 9.2 percent but we at Airtel grew by about 13.8 percent in local currency terms, which clearly shows that we are outpacing the market much more in the international portfolio," Kohli added.
He said the company will launch 3G services in Bangladesh in the next fortnight.
Airtel's consolidated net debt reduced to USD 9,697 million, resulting in the net debt to EBITDA ratio (in US dollar terms) at 2.18 times as compared to 2.59 times at the end of the same quarter last year.
Airtel said it retains its capex plans of investing USD 2.2-2.3 billion in FY14.
"Our expectation at the moment is still to end up somewhere around USD 2-2.2 billion by the end of this financial year," Dhillon said.
