Bharti Airtel reported a net profit of ₹97.3 cr for quarter ending June 30, a decline from ₹367.3 cr the same quarter the previous year. Its consolidated net revenues for June quarter stand at ₹20,080 cr, a decrease from ₹21,958 cr the previous year. Airtel’s net revenue dropped by 9% and net profits dropped by 74% calculated on a YoY basis.
Decreased voice and data earnings
Though voice usage per customer increased by 22%, the earnings decreased by 34%. Similarly data usage from Airtel increased to 189% but its earnings dropped to 73%. The Average Revenue per User (ARPU) slipped by 8.8% to ₹105 in June quarter from ₹154 a year ago.
Airtel received a one time exceptional deferred tax gain of ₹515.6 cr in this quarter which helped it avoid losses. ‘Bharti Airtel would have reported loss had it not been for the deferred tax gain in Africa,’ Livemint quoted an analyst tracking the telecom sector with a domestic brokerage who didn’t want to be named.
Gopal Vittal- the Managing Director and chief executive of (India and South Asia) at Bharti Airtel justified the earnings with operational expenses for best-in-class services.
‘Our investments have led to some operational expense headwinds in this quarter, but we remain focused on structural cost containment. With consolidation largely done, the secular opportunity of the Indian telecom market continues to excite us and we remain committed to offer best-in-class services to all consumers’, he says.
‘Aggressively expanding our 4G capacities and continuing to offer highest data speeds to customers remains a key priority for us, and towards this end, the quarter has seen our highest quarterly capital expenditure of ₹7,887 crore’ he added.
Reliance Jio – the competitor
Reliance Jio entered the market in September 2016 with competitive tariffs, marketing and operational structure. This put a stress on profitability, cash flow as well as leverage on Airtel.
With the government providing approval for Videocon Idea merger, Bharti Airtel has another competitor along with Reliance Jio.