Bharti Airtel Q3 net slumps 39%

Cut in interconnect charges hits profit

An employee sits at a Bharti Airtel public phone booth installed at the airport in New Delhi in this October 23, 2012 file photo. India's federal police filed charges against Bharti Airtel Ltd and Vodafone Group Plc's India unit on December 21, 2012 as part of a probe into alleged corruption in the allocation of mobile phone airwaves a decade ago, a lawyer said.

Bharti Airtel reported a 39% drop in its consolidated net profit to ₹305.8 crore for the quarter ended December 31, mainly on account of reduction in domestic interconnection charges.

The country’s largest telecom operator also cautioned that the regulator TRAI’s recent decision to cut international interconnection charges will further impact the ARPU (average revenue per user).

“Regulatory fiat in the form of a cut in domestic IUC rates has exacerbated the industry ARPU decline in Q3’18,” Gopal Vittal , the company’s MD and CEO, India & South Asia, said in a statement on Thursday.

“The recent announcement of reduction in international termination rates will further accentuate this decline and benefit foreign operators with no commensurate benefit to customers,” he said.

Mr. Vittal added the continued investments in data capacities, strategic partnerships with content and handset providers and focus on customer-friendly innovations like data rollover had led to the ‘healthy’ addition of 8.1 million customers during the quarter.

Revenue declines

Consolidated revenue for the third quarter stood at ₹20,318.6 crore, an almost 13% drop from ₹23,335.7 crore in October-December 2016 quarter. The company, however, said that when adjusted for the reduction in domestic termination rate and the divestment of operating units in Africa and Bangladesh, the decline in revenue was about 8.4%.

“The company’s board has declared an interim dividend of ₹2.84 per share, which is a complete pass through of dividend received from subsidiaries,” the statement added.

The Telecom Regulatory Authority of India (TRAI) had cut domestic mobile interconnect usage charges from 14 paise a minute to 6 paise a minute, starting October 1. Earlier this month, the regulator also reduced the international call termination charges to 30 paise from the 53 paise currently with effect from February 1.

The company said its India revenues during the quarter stood at ₹15,294 crore, a decline of 15.1%. It added that on an underlying basis, adjusted for the impact in reduction of domestic termination rates, the decline in revenues was 11.3%.

“Y-o-Y de-growth primarily impacted by mobile drop of 17.6%. India other business have witnessed healthy growth e.g. 10.4% in Digital TV and 7.2% in Airtel Business on Y-o-Y basis,” the company said in a statement.

The company said that mobile data traffic rose more than six-fold to 1,106 billion MBs in the quarter as compared with 172 billion MBs in the corresponding quarter last year. Mobile broadband customers increased 64.9% to 62.1 million from 37.7 million in the year-ago period.

On the other hand, Africa revenue rose 5.3% (in constant currency terms) led by strong growth in data and Airtel Money transaction value.