Bharti Airtels profits for the first quarter of the current fiscal fell by 37 per cent to Rs 762.2 crore for which the company blamed recent regulatory developments and higher tax outgo.
Chairman & managing director Sunil Bharti Mittal said,Telecom revenues in India have been depressed due to hyper-competition and recent regulatory & tax developments. The results are likely to be a concern when the government is mulling over an expensive auction of 2G spectrum for which all telecom firms will want to build up a war chest.
This is the tenth straight quarter when Bharti Airtel profits have dipped. The key metric for the company,average revenue per user (ARPU) in the reported quarter stood at Rs 185 per month compared to Rs 190 in the same period last year and Rs 189 in the fourth quarter of the last fiscal. As on June 30,2012,the company had 187.3 million mobile customers on its network,an increase of over 11 per cent compared to June 30,2011,of which 5.1 million were 3G users.
The companys shares closed at Rs 274.40 apiece,6.6 per cent down over yesterdays closing on the Bombay Stock Exchange.
A company release said that EBITDA margin at 30.2 per cent was depressed due to hike in service tax from 10.3 per cent to 12.36 per cent,effective April 1,2012,and enhanced market participation and planned accelerated investments in both India and Africa. The debt equity ratio of the company is the best among all telecom firms but the level of competition in the sector is hurting everyone. As a result its free cash flow the amount available for shareholders after all other pay outs has dipped to 41 per cent from the quarter before to Rs 2,272.9 crore.
However,the total revenues of the company were up due to growth in Africa and increased data usage by consumers in India to Rs 19,350 crore (a 14 per cent growth) against the same period of last year.
Going ahead,the company sees a silver lining in the increase in data usage by consumers in India. I am also pleased to see that India data pick-up is accelerating with over 38 million customers and mobile data revenues up 44 per cent. On the African side,we are gaining market share,benefitting from the significant investments made in the last two years, Mittal said.
But analysts do not see much improvement in the domestic revenues in the near future. Right now,the companys focus is to improve revenue market share in the domestic market and they may have to sacrifice on the operating margins to achieve that, Ankita Somani,research analyst (IT & Telecom),Angel Broking,said.
Company CEO Sanjay Kapoor said the public offer of tower unit Bharti Infratel Ltd (BIL) is now subject to market risks and approvals. The company has appointed a committee of its board of directors to consider the IPO by selling up to 10 per cent stake. BIL has more than 33,000 towers in operation.