Bharti delivers on revenues; tariff hikes aid realisations

K. Venkatasubramanian BL Research Bureau | Updated on November 15, 2017

Bharti Airtel's mobile business as well as its passive infrastructure segment has aided a fairly robust growth in revenues for the company in the December quarter. Profits though disappointed.

Keenly watched parameters such as ARPU (average revenues per user) and RPM (realisation per minute) increased over the quarter in its mobile business, as with peer Idea Cellular. Also, rentals and tenancy in its towers were up.

For the quarter, revenues increased by 17.1 per cent over the same period last fiscal to Rs 18,476.7 crore, while net profit fell 22.4 per cent to Rs 1,011.3 crore.

The fall in profits has partly been due to higher depreciation and increased amortisation cost as a result of commencement of 3G operations. Tax outflows too zoomed 65.9 per cent to Rs 558.5 crore, further denting profits.

Key parameters improve

Bharti saw its ARPU increase by about 2.2 per cent sequentially to Rs 187, after a series of declines over the past four quarters. The RPM improved by 3.2 per cent to 44.6 paisa. Clearly, the company's increase in tariffs has started to pay off. The company continues to reduce its rate of subscriber additions, which stood at around 2.9 million for the quarter, much lower than even the previous quarter's 3.6 million.

That quality subscriber additions has been the focus is evident from the fact that the proportion of active subscribers (those that recharge and use services regularly) in its network increased to 90 per cent. The company's African operations witnessed stable ARPUs at $7.1.

With the cancellation of 122 telecom licences of new operators recently, Bharti's pricing power is likely to increase, which may result in improvements in realisations.

Bharti's passive infrastructure business, the company's second largest segment, saw its rentals increase 3.6 per cent to Rs 34,290 per tower, while tenancy increased to 1.87 and is steadily approaching 2, a desirable level.

Among other segments, Bharti's telemedia (landline and broadband) division witnessed fall in subscribers, revenues and ARPUs, indicating that the company is yet to make inroads into BSNL's stronghold.

The DTH business continues to see rapid addition of subscribers, though losses (at EBIT level) have widened as the company subsidises the cost of set top boxes.

Bharti's enterprise services segment continues to witness expansion in revenues, though operating margins took a hit in a highly cost-competitive market.

Published on February 08, 2012

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