Airtel result reflects Indian telecom industry’s poor financial health

Airtel CEO Gopal Vittal on 4GBharti Airtel has posted revenue of Rs 20,319 crore (–12.9 percent) EBITDA of Rs 7,587 crore (–11.5 percent) and net profit of Rs 306 crore (–39.3 percent) in Q3 – reflecting the Indian telecom industry’s financial health.

Airtel said total mobile data traffic surged 460.4 percent to 1,178 million MBs in the third quarter of fiscal 2018.

Airtel India CEO Gopal Vittal did not talk about competition from Reliance Jio, Vodafone or Idea Cellular for the poor performance.

“A cut in domestic IUC rates has exacerbated the industry ARPU decline in Q3 fiscal 2018. The recent announcement of reduction in International termination rates will accentuate this decline and benefit foreign operators with no commensurate benefit to customers,” said Gopal Vittal, MD and CEO of Airtel India & South Asia.

Reliance Jio, the all India 4G operator, will announce its financial performance on Friday. It is believed that Reliance Jio has improved its financials during the quarter thanks to addition of more active 4G subscribers.

Airtel India

Airtel India revenue dipped 15.1 percent to Rs 15,294 crore — primarily impacted by mobile drop of 17.6 percent. Airtel Digital TV business achieved 10.4 percent growth, while Airtel Business revenue grew 7.2 percent.

Airtel said its mobile data traffic has grown more than 6x to 1,106 billion MBs in the quarter as compared to 172 billion MBs in the corresponding quarter last year. Mobile broadband customers increased 64.9 percent to 62.1 million.

Airtel India added 8.1 million mobile data customers followings its investment in mobile data capacities, partnerships with content and handset providers and focus on customer friendly innovations like data rollover.

Airtel India has deployed 32,000 broadband site in the quarter. Airtel India achieved data traffic growth of 544 percent and voice traffic growth 50 percent.

Airtel Africa

Airtel Africa reported revenues grew 5.3 percent — led by 95.3 percent growth in data traffic to 66 billion billion MBs and Airtel money transaction value. Data customers increased 39.4 percent to 23.3 million. Airtel Money customer base increased to 10.4 million, boosting the transaction value on Airtel Money platform by 37.9 percent to $5.4 billion. EBITDA margin was 10.8 percent to 35.5 percent.

Raghunath Mandava, MD and CEO of Airtel Africa, said: “Airtel has witnessed a revenue growth of 5.3 percent with a higher net revenue growth of 8.8 percent.”

Airtel has consolidated net debt of Rs 91,714 crore. Net debt to EBITDA ratio (LTM) for the quarter was 3.01 times (vs 2.91 times in the previous quarter). Lower EBITDA along with rising spectrum costs and continued investments in India have resulted in deterioration of Return on Capital Employed (ROCE) to 4.9 percent from 7.1 percent in the corresponding quarter last year.

Baburajan K