Airtel net profit plummets by 28 percent in Q1 FY 2012

Airtel has reported a 28 percent decline in net profits for the first quarter ended June 30, 2011. Net profits stand at Rs 1,215 crore for Q1, as compared to Rs 1,681.6 crore in Q1 last year.


The consolidated total revenues for Q1 stood at Rs 16,975 crore, showing a growth of 38.6 percent over last year. India and South Asia revenues are up by 11.9 percent since last year, standing at Rs 12,631 crore. Africa has also reported quarterly revenues of $979 million, up 6 percent over the last quarter, which saw revenues of $924 million.


Consolidated EBITDA grew 28.3 percent y-o-y, standing at Rs 5, 706 crore at the end of Q1. Total sales were up 38 percent to Rs 16,983 crore in Q1, as against Rs 12,285 crore in the same quarter last year.


The recent results show that Bharti Airtel has recovered slightly from the last quarter, wherein it registered a 32.6 percent decline in net profits.


The net profit at $1,354 million in the last quarter which was down from $1,989 million in the previous year, was due to increase in net interest outgo ($333 million), forex restatement losses ($152 million), re-branding expenses ($76 million) and increase in spectrum charges in India ($59 million). The consolidated EBITDA margin for the year, as reported in the last quarter also declined by 6.5 percent over the previous year, which was attributable to pricing pressure in India and South Asia and the lower margins in African operations acquired during the year.


“Bharti Airtel has started this fiscal year on a stable note. Revenue growth has been steady across all geographies, with Africa recording a healthy sequential growth of approximately six percent, and annual growth of 21 percent. In India, the company’s efforts in the area of cost efficiencies have helped arrest the margin decline. The new customer facing organization in India will see more agile and responsive teams in action. This will also give a fillip to growth in value added services, broadband, digital TV and airtel money. Overall, 2011-12 promises to be an exciting year of transformation,” said Sunil Bharti Mittal, chairman & MD, Bharti Airtel.


Airtel recently underwent a restructuring that merged its wireless, fixed line DTH and broadband units, which together bring in 90 percent of the operator’s revenues, in an effort to curb falling profits and boost efficiency. Airtel also recently raised its India prepaid mobile tariffs by 10 paise, in a bid to arrest falling ARPUs. Airtel is currently facing a huge burden on account of its Africa operations, having cleared the last tranche payment to Zain for its $9 billion buyout of the latter’s Africa assets. Airtel is also struggling with recovering ROI for its 3G roll-outs, alike other Indian 3G operators. These two factors have been majorly responsible for the consecutive four quarter drop in profit margins.


By Beryl M
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