Airtel Posts Its First Quarterly Loss in Over a Decade

Such a loss suffered by Airtel reduces the prospects of revival of a sector battered and bruised by heightened competition from Reliance Jio.

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Airtel Posts Its First Quarterly Loss in Over a Decade

Telecom major Airtel on Thursday posted a mammoth consolidated net loss of Rs. 2,866 crores for the first quarter ending June caused mainly by a one-time hit of Rs. 1,445 crores.

Such a loss suffered by India's third-largest mobile operator by subscriber base reduces the prospects of revival of a sector battered and bruised by heightened competition from Reliance Jio for subscriber and revenue market share.

The company said in a statement that with the adoption of IndAS 116, effective April 1, 2019, the results and ratios for the quarter ending June are not comparable with previous periods.

Revenue from the India wireless business grew 4.1 percent year-on-year (Y-o-Y) to Rs. 10,724 crores.

All telecom companies are currently in loss resulting out of their tariff wars with Reliance Jio, which entered the mobile market with ultra-cheap data tariffs and free voice calls.

The exceptional hit of Rs. 1,445 crores during the first quarter was mainly due to the charge of Rs. 142 crores towards accelerated depreciation of 3G network equipment and operating costs on network re-farming and up-gradation program, incremental provision aggregating Rs. 1,586 crores of derivative liabilities pertaining to customary indemnities provided to a clutch of investors of Airtel Africa, and expenses relating to its listing, among others, Airtel said.

There were some gains on re-assessment of levies based on ex-parte judgment and net tax benefits.

The Sunil Mittal-led company, which was the number one mobile operator till the Vodafone Idea merger last year, and subsequently lost its second slot to Reliance Jio on customer numbers, saw its first quarter India revenues at Rs. 15,345 crores increase 5.5 percent Y-o-Y on an underlying basis.

Mobile revenues during the quarter in consideration witnessed a Y-o-Y growth of 3.7 percent. Mobile average revenue per user (ARPU) increased to Rs. 129, while mobile data traffic nearly doubled to 3,904 petabytes (PBs) as compared to 2,003 PBs in the corresponding quarter last year.

Mobile 4G data customers during the June quarter increased by 63.3 percent to 95.2 million, from 58.3 million in the corresponding quarter last year.

Non-mobile businesses continue to perform well. Digital TV revenue witnessed a growth of 15.7 percent Y-o-Y on an underlying basis. The company reported a decline of 25.5 percent on reported basis due to reporting changes in DTH pursuant to the new tariff order, leading to content cost becoming a pass-through expense.

Airtel's business has witnessed a growth of 7.2 percent Y-o-Y, but these growth numbers failed to boost the bottomline, the company said.

Consolidated EBITDA at Rs. 8,493 crores increased 24.2 percent Y-o-Y. Consolidated EBITDA margin increased by 6.4 percent to 41 percent in the first quarter as compared to 34.5 percent in the corresponding quarter last year. Consolidated EBIT dropped by 4.5 percent Y-o-Y to Rs. 1,605 crore.

Airtel undertook capex of Rs. 5,047 crores during the quarter in question, down from Rs. 6,273 crores in the previous one.

The telco has net debt of Rs. 1.16 lakh crores as on June 2019.

"The consolidated net loss after exceptional items for the quarter stands at Rs 2,866 crores", Airtel said.

The consolidated net debt for the Company has increased by Rs. 3,655 crores to Rs. 1.16 lakh crores as compared to Rs. 1.12 lakh crores for the previous quarter, primarily on account of increase in lease liabilities in line with Ind As 116. On a comparable basis, consolidated net debt was Rs. 93,095 crores," it added.

The sole profitable mobile operator in the June quarter was Reliance Jio which posted a profit of Rs. 891 crores while Vodafone Idea posted net loss of Rs 4,873.9 crores.

The ARPU for Bharti Airtel has been improving as it sheds low-paying users from its network with minimum recharge plans of Rs. 35.

Airtel had posted a surprise profit of Rs. 107.2 crores in the three months ended March 31 because of a one-time gain of Rs. 2,022.1 crores and a tight control on sales and marketing expenses. It had also posted a small profit in the same period a year ago.

One major announcement of the first quarter was of Airtel re-farming spectrum from 3G networks to 4G across both the 900 as well as 2,100 bands and starting the process of shutting down 3G networks in India.

"We have re-farmed spectrum from 3G networks to 4G across both the 900 as well as 2,100 bands and begun the process of shutting down 3G networks in India. This has enabled us to deliver improved indoor coverage as well as enhance our capacities. Our underlying operational efficiency and customer-first mindset keeps us on track to grow our market share", Airtel MD and CEO (India and South Asia) Gopal Vittal said.

He also said the fiscal's first quarter has begun with a healthy and equitable growth across all lines of businesses. Headline pricing remained stable, albeit at low levels.

"We continue to remain focused on providing value to customers through our rewards platform, Airtel Thanks. This has led to the second consecutive quarter of ARPU increase," he said.

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