Bharti Airtel profit drops 2.8% to Rs 830 crore in Q3; revenue up 12.6%

Telecom major Bharti Airtel’s net profit dipped 2.8 per cent year on year to Rs 830 crore in the October-December quarter (Q3) of 2021-22. In the same period last year, the company had posted a net profit of Rs 854 crore. Its operational performance was better than Street estimates, but the net profit fell short of expectations, mainly because of higher tax outgo.

The company’s revenue for the quarter grew 12.6 per cent to Rs 29,867 crore on a year-on-year (YoY) basis. The average revenue per user (Arpu) rose 6.5 per cent sequentially and 11.6 per cent YoY to Rs 163 due to an increase in mobile tariffs in late November. The full impact of the hike will be visible in the fourth quarter, the company said.

While the firm’s finance cost increased by 8 per cent YoY, its tax expenses more than doubled (up 126 per cent to Rs 991 crore), dragging the profit down. At operating level, the company posted a 22 per cent increase in profit to Rs 14,905 crore while margin grew by 4 percentage points to 49.9 per cent from 45.9 per cent a year ago.

According to Bloomberg, analysts had pegged revenues at Rs 29,370 crore, Ebitda (earnings before interest, taxes, depreciation, and amortisation) at Rs 14,574 crore, and net profit at Rs 928 crore.

There was de-growth of around 600,000 in the mobile business customer base in India. The 4G customer base, however, saw growth, both on a sequential and annual basis. At the end of December quarter, Airtel had 323 million mobile subscribers, including 195.5 million 4G users, in India. Mobile data consumption per customer also saw 33.8 per cent YoY growth at 18.3 GB per month.

“We have delivered another quarter of sustained performance across all our business segments. Overall sequential revenue growth was at 5.4 per cent and Ebitda margins came in at 49.9 per cent,” Airtel Managing Director and CEO Gopal Vittal said.

“Our enterprise, Homes and Africa business continue to deliver strongly, with steady increase in contribution to the overall mix of the portfolio. Our balance sheet is robust and we are now generating healthy free cash flows. This has enabled us to recently prepay some of our spectrum liabilities to the government thereby reducing the interest burden,” he added.

The company generated free-cash flow of Rs 8,803 crore during the quarter, up from Rs 5,314 crore a year ago and Rs 7,046 crore in the previous quarter. Net debt was down from Rs 1.66 trillion in the September 2021 quarter to Rs 1.59 trillion. The net debt to Ebitda (annualised basis) at 2.67 times was the lowest in at least five quarters, and the interest coverage ratio at 4.34 times the best in at least five quarters.

According to UBS Global Research, Airtel showed much better performance versus competitors, as Jio lost 8.5 million subscribers and Vodafone Idea lost 5.8 million subscribers in Q3.

“Despite the subscriber loss, higher tariffs and improved customer mix (3 million 4G subscribers were added by Airtel) resulted in Arpu expanding 6.5 per cent QoQ from Rs 153 to Rs 163, in line with our estimates,” it said.

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