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In reporting a negative profit-before-tax figure, Bharti Airtel’s challenges in its domestic mobile operations only seem to have increased in the June quarter.
Overall revenues fell 9 per cent YoY during the first quarter. The company would have reported a net loss, but for the creation of deferred tax asset in its Nigerian operations to the tune of ₹515.6 crore. The Profit before tax, a more representative figure, was a negative ₹285 crore (in other words, a loss).
Clearly, Reliance Jio’s tariff war is continuing to take a heavy toll on even the large surviving incumbent operators’ financials, with no signs of immediate recovery. The positives for Airtel in the quarter were the steady performance of its DTH business and its B2B services segment.
Mobile operations weak
Airtel’s domestic mobile operations were weak, with the revenues from the segment declining by nearly 19 per cent. The average revenue per user continued to decline and fell nearly 32 per cent YOY in the June period, to ₹105.
Thanks mostly to the integration of Telenor, Airtel had robust subscriber addition of 40 million during the period. Average data consumption per user was up three-fold to nearly 7.9GB in the June quarter.
The Idea-Vodafone merger is set to take place next month. Jio continues to compete on tariffs and is also set to launch its post-paid option as well. Clearly, the competitive intensity is not going to abate for the foreseeable future as operators try to poach subscribers from one another. For Airtel, the silver lining was visible in its African operations, with revenues from the geography increasing at a healthy pace.
Other businesses shine
Airtel’s DTH segment(7 per cent of revenues) continues to grow in double digits, with revenues increasing by 11 per cent YOY in the June quarter. Subscriber addition, at 4.8 lakh, was robust. The ARPU from the segment(₹229) too was largely stable.
Revenues from the B2B business(20 per cent of revenues), which is mainly focussed on providing connectivity to corporates, rose 7 per cent YoY.
As one of the three strongest entities left in the mobile arena, Airtel may still weather the storm on tariffs and competition. But it would be a few more quarters before the company gets to deliver reasonable bottom-line figures. Till such time, the African operations and the non-mobile business would have to chip in to shore up profitability.
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