Bharti Airtel Q2 net profit dips 76.5%

Akhil Gupta

Intraday reports for Bharti Infratel(INFRATEL, 534816) Stock & Share Prices - October 30, 2017

For India, Bharti Airtel showed a drop of over 90 per cent in its net profit to Rs 121.1 crore (before exceptional items) for the quarter ended September 30, over Rs 2,095.9 crore in the same period past year. Mobile data traffic has grown fourfold to 784 Bn MBs in the quarter as compared to 178 Bn MBs in the corresponding quarter a year ago.

The company said it had "stepped up" the capex investments in the quarter on the back of data coverage and capacity.

"The consolidated revenues for Q2'18 at Rs 21,777 crore, Y-o-Y drop of 10.4% (reported drop of 11.7%) on an underlying basis (viz. adjusted for Africa / Bangladesh divested operating units and tower assets sale)", the company said. Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 17.4 percent to Rs 7,922 crore, while EBITDA margin contracted to 36.4 percent from 30.72 percent in the previous quarter, the company said.

Airtel's profit for the quarter stood at Rs 586.1 crore.

The company - which has 282 million wireless subscribers - admitted that the mobile market continues to experience "value erosion and financial stress led by competitive pressures".

Revenue of the company, which operates in 17 countries across Asia and Africa, fell 11.7 per cent to 217.77 billion rupees. Mobile broadband customers increased by 33.6% to 55.2 Mn from 41.3 Mn in the corresponding quarter previous year. 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.

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The consolidated operating margin declined 1.6%, while net debt increased 4% sequentially as it continued to invest in expanding its network to take on Jio's pan India reach.

The stock already reacted to positive news flow (acquisition of consumer telecom business of Tata Teleservices, likely tower deals and hope of tariff rate stabilisation), he said.

Consolidated net profit of Bharti Airtel, backed by Southeast Asia's largest telecom company Singapore Telecommunications, stood at 3.43 billion rupees ($53 million), compared with 14.61 billion rupees a year earlier.

Mayuresh Joshi, Angel Broking fund manager and sector expert, wasn't surprised by the sharp drop in Airtel's net profit, "as the July-September period is, typically, a seasonally weak quarter".

Shares of BHARTI AIRTEL LTD. was last trading in BSE at Rs.497.65 as compared to the previous close of Rs. 492.8. The move is also set to consolidate Bharti's leadership in India's mobile phone market, which was imperiled by the merger of second- and third-ranked Vodafone India and Idea Cellular.

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