Bharti Airtel Q2 cons profit falls 7%, but operating income, Africa biz beat estimates

Country's largest telecom operator Bharti Airtel's second quarter consolidated profit fell 6.6 percent sequentially to Rs 343 crore, dented by pricing pressure in India business; but operational earnings and Africa business beat estimates.

Profit for the quarter ended June 2017 stood at Rs 367.3 crore.

Revenue from operations slipped 0.8 percent quarter-on-quarter to Rs 21,776.9 crore for September quarter, which was largely in line with estimates.

Consolidated profit and revenue on year-on-year basis declined 76.5 percent and 11.66 percent, respectively.

Numbers were positive at operational level, driven by Africa business. EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 2.3 percent sequentially to Rs 8,003.7 crore and margin expanded by 120 basis points to 36.8 percent for the quarter.

Profit was estimated at Rs 319 crore on revenue of Rs 21,746 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

India's largest wireless operator (both in terms of customers and revenues) said voice volumes increased 3.6 percent quarter-on-quarter to 437.1 billion minutes and voice usage per customer rose 2.2 percent to 518 minutes for September quarter, but average revenue per user declined to Rs 145 compared with Rs 154 in previous quarter.

India business revenue during the quarter dropped 5.2 percent sequentially to Rs 12,245 crore and EBITDA slipped 5 percent to Rs 4,208.7 crore due to pricing pressure, but margin increased 10 basis points to 34.4 percent.

Its data customer base increased to 65.77 million at the end of September quarter 2017, higher by 5.1 percent compared with previous quarter. "Total MBs on the network saw a whopping 65.9 percent increase quarter-on-quarter at 783.8 billion minutes and data usage per customer for the quarter stood at 4,087 MB, higher by 56.5 percent QoQ," Bharti said.

Revenue from its Africa business was strong for the quarter ended September 2017, rising 7.2 percent to Rs 5,203 crore and EBITDA shot up 23.7 percent to Rs 1,684.1 crore with whopping margin expansion of 430 basis points at 32.3 percent compared with previous quarter.

Navin Kulkarni of Phillip Capital feels numbers are very strong in current competitive environment. "We should start seeing some upside as Africa business will improve further."

The stock already reacted to positive news flow (acquisition of consumer telecom business of Tata Teleservices, likely tower deals and hope of tariff rate stabilisation), he said.

Airtel's capex during the quarter increased 13.6 percent to Rs 7,483.8 crore. Its net debt at the end of September quarter stood at Rs 91,480.1 crore, higher by 4.1 percent compared with previous quarter.

Standalone profit grew by 76 percent sequentially to Rs 494.5 crore, driven by finance income that doubled QoQ. Revenue from operations on standalone basis declined 3.6 percent to Rs 13,980.1 crore for quarter ended September 2017.

Ahead of earnings, the stock closed at Rs 497.65, up 0.98 percent on the BSE.