28 Apr : Bharti Airtel, the country’s largest telecom operator, on Wednesday posted its first fall in earnings in three years as cut-throat competition dented margins leading to an 8 per cent drop in net profit to Rs 2,060 crore in the fourth quarter.
During the period, the company’s total revenues crossed the Rs 10,000-crore mark for the first time in the quarter. Total revenues were at Rs 10,060 crore for Q4 ending 31st March, 2010, up 2 per cent from the same quarter last year.
Falling margins, falling average revenue per user and a sharp decline in call rates, mainly accounted for the slide in profits.
Revenues for telecom operators have come under pressure with the entry of 14 new players, as they are offering rock bottom tariff to woo customers.
However, there was some comfort for Airtel in Q4 as the company finally recorded a rise in minutes of usage per user after registering a fall for six straight quarters.
“Bharti Airtel continues to be strongly positioned in India despite a hyper competitive market,” Bharti Airtel Ltd Chairman & Managing Director Sunil Bharti Mittal said.
For the full-year 2009-10, the consolidated revenue was up 7 per cent at Rs 39,620 crore year-on-year, while its net profit was up 7 per cent at Rs 9103 crore.
Bharti Airtel’s Average Revenue per User (ARPU) was at Rs 220 in the fourth quarter, 4.3 per cent down from Rs 230 in the quarter ended 31st December.
The company made acquisitions in Bangladesh and Africa during the quarter, including the USD 9 billion acquisition of the African assets of Kuwait’s Zain telecom.
Its earnings before interest, taxes, depreciation and amortization, or EBITDA margin (an indicator of profitability)–excluding acquisition costs–contracted to 39 per cent from 40 per cent in the fiscal due to lower tariffs.
The EBIDTA margin for its mobile services that contribute more than 81 per cent to the company’s total revenue fell to 29.2 per cent from 30.4 per cent in the previous quarter.
The company added 8.8 million users in the fourth quarter, including those from Bangladesh and Sri Lanka.
The company’s operating expenses also rose 20 per cent year-on-year to Rs 4,107 crore because of a sharp increase in network costs. Indian mobile operators have been adding 13-16 million subscribers a month.