Airtel Q2 profit plunges 76.5% to Rs 343 cr on tariff wars

Bharti Infratel Ltd reported a 17 per cent drop in second-quarter profit missing analysts’ estimate as higher expenses weighed

Net interest costs of the company have risen to Rs 1,905 crore from Rs 1,603 crore in the corresponding quarter previous year, largely due to lower investment income.

Profit for Airtel - around 36% owned by SingTel - fell to Rs 343 crore from Rs 1,461 crore a year earlier in the quarter ended September, also hurt by a one-time charge of Rs 145.5 crore for network re-farming and up-gradation, the carrier said in the statement. The revenue during July-September quarter jumped almost 11% to Rs3,648 crore from Rs3,292 crore in the year- ago period, according to a company statement. "Mobile market continues to experience value erosion and financial stress led by competitive pressures", the company said.

"The financial stress in the industry continues due to double digit revenue decline and will be further accentuated by the reduction in IUC rates in the next quarter", Gopal Vittal, Bharti Airtel's chief executive for India and South Asia, said in a statement. The company reported consolidated revenues of Rs 21,777 crore.

In an indication of how Airtel tried to retain its customers from moving to Reliance Jio's network, mobile data usage per customer during the quarter rose 308% to 4.08 GB per month as compared to 1 GB during the year ago period.

Data traffic has grown fourfold to to 784 billion MBs.

"Airtel remains committed to its goal of increasing revenue market share in this competitive environment by providing superior customer experience and strategically investing behind building more data capacities", Vittal said.

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Ever since Reliance Jio entered the market in September previous 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.

Large Indian mobile telephony players like Airtel, Vodafone and Idea have been reeling under reduced revenue and margins since Reliance announced Jio, its 4G data-enabled services a year ago. Jio, which reported its results for the first time earlier this month, reported ARPU of Rs 156.4, now the highest in the industry.

Airtels consolidated net debt rose to Rs 91,480 crore against Rs 87,840 crore in the previous quarter.

The Africa market fared better with revenue rising 2.8 per cent on an underlying basis, while the operating profit margins improved over 9 per cent year-on-year buoyed by "continuous cost control initiatives". Revenue from operations on standalone basis declined 3.6 percent to Rs 13,980.1 crore for quarter ended September 2017.

Bharti Airtel shares gained 1% to Rs 497.65 at the close on the BSE on Tuesday. The second quarter earnings announcement came in after market hours.

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