Bharti Airtel, the largest telecom operator, on Tuesday reported a 63.71 per cent year-on-year (YoY) fall in net profit at Rs 586.10 crore for the September quarter.
Shares of Bharti Airtel on Wednesday surged 9.5 per cent even as the company posted sixth straight quarter of drop in earnings as its consolidated net profit plunged 76.5 per cent for the September quarter. "This will eventually force operator consolidation and exits as the industry has witnessed in the recent past", Gopal Vittal, MD and CEO, India and South Asia, Bharti Airtel said in a statement.
From mobile subscriber point of view Airtel has a total of 383.5 million customer worldwide that includes its Africa operations as well.
Ever since Reliance Jio entered the market in September past year, Airtel as well as others have seen their profits slide. Ever since it entered the market, Jio has pursued a strategy of slashing prices to attract subscribers.
In April, Jio started charging customers for the first time, stirring hopes of a partial recovery in the industry.
Consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) at Rs 8,004 crore declined 15.4 per cent year-over-year and Ebitda margin dropped 1.6 per cent to 36.8 per cent over the same period. "Of course, this has been RJio-dictated so far and with RJio showing intent to raise its tariffs (rates), it appears the floor for Arpu/tariffs in the industry is to progressively go higher", it said (Arpu is average revenue per user).
JP Morgan says despite data volumes rising 440% year-on-year and voice minutes going up 40%, Airtel's India wireless revenues are down 17% over a year, showing the need for monetising the rising usage. On sequential basis, profit fell 5.11 per cent sequentially. Consequently, its net debt excluding the deferred payment liabilities to the Department of Telecommunications and finance lease obligations increased by Rs 2,554 crore sequentially in the quarter.
Last year, Bharti Airtel pledged to invest 600 billion rupees in upgrading its network infrastructure. The move is also set to consolidate Bharti's leadership in India's mobile phone market, which was imperiled by the merger of second- and third-ranked Vodafone India and Idea Cellular. It had previous year acquired the local operations of Norway's Telenor and India's Videocon, hastening the pace of consolidation in the market.