Bharti Airtel reported on August 5 that its Q1 FY25 net profit swelled 158 percent year-on-year to Rs 4,160 crore from Rs 1,612 crore in the corresponding quarter last year, beating Street expectations. This was mainly helped by exceptional items. Consolidated net profit before exceptional items for the first quarter was Rs 2,925 crore.
During the quarter ended June 30, 2024, the net exceptional gain of Rs 735 crore comprised a gain of Rs 1,399.1 crore on account of a favourable judgement by the Supreme Court of India regarding the waiver of interest on the tax treatment of adjusted revenue-linked variable license fee payable to DoT.
The net exceptional gain also includes a gain of Rs 274 crore pertaining to the divestment of Airtel Lanka, offset by a charge on account of a foreign exchange loss of Rs 938.7 crore due to currency devaluation in its group subsidiaries. Airtel said that the net tax benefit on the above exceptional item is Rs 328 crore.
The telecom major’s revenue for the April-June quarter rose 2.8 percent on-year to Rs 38,506 crore from Rs 37,440 crore, which the company said was limited due to currency devaluation in Africa.
A Moneycontrol poll of 5 brokerage estimates pegged Bharti Airtel’s fiscal first quarter net profit at Rs 3,455 crore, and revenue at Rs 38,611 crore.
The average revenue per user (ARPU) per month, an important metric used by telecom companies to measure revenue generation, increased 5.5 percent year-on-year to Rs 211, from Rs 200 a year ago.
Kotak Institutional Equities expected ARPU to marginally increase to Rs 210 in Q1FY25 compared to Rs 209 in the previous quarter. However, the recent tariff hikes will take a couple of quarters to fully reflect on the realisation. Axis Securities expected a 15 percent ARPU gain in Q3FY25, with a combination of higher conversion and tariff hikes.
Airtel's subscriber base reached 409 million in the quarter. The 4G/5G data customer base increased by 29.7 million year-on-year and 6.7 million QoQ, 73% of the overall mobile customer base.
The postpaid net adds stood at 0.8 million. Mobile data consumption is up by 26.0% year-on-year, with consumption per customer at 23.7 GB per month.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the quarter were Rs 19,944 crore, up 1 percent year-on-year. The EBITDA margin was 51.8 percent, shrinking by 90 basis points year over year. EBIT was Rs 9,355 crore, down 7.2 percent year-on-year.
Capex for the quarter stood at Rs 6,781 crore, down 27 percent year-on-year. Capex for mobile services in India declined 38 percent at Rs 4,848 crore, but for home services it jumped 42 percent to Rs 707 crore.
"Our stringent focus on driving cost efficiencies is reflected in strong operating leverage. Africa continues to deliver strong underlying constant currency revenue growth," Gopal Vittal, MD of Airtel, said in a statement.
He said that during the quarter, Airtel accelerated the pace of FWA services expansion across key towns, which would expand the addressable market.
The homes business delivered a revenue growth of 17.6% YoY, driven by healthy customer additions. Airtel said its focus on digitization and acquiring high-value customers led to 348,000 customer additions in the quarter, bringing the total base to 8.0 million.
"We continue to expand our home-pass network through our own and asset-light local cable operator partnership model. Our WiFi services are now live in 1317 cities," Vittal said.
Airtel Business delivered revenue growth of 8.3% YoY, led by growth in underlying domestic portfolio.
Revenue from Digital TV remained stable, with a 16.3 million customer base at the end of the quarter. Digital TV revenues up by 5.0% YoY, led by customer additions and rationalization improvement
In the recently concluded spectrum auction, Airtel renewed the spectrum expiring in 6 circles and further bolstered our sub-giga hertz and mid-band holding in key circles by investing Rs 6,857 crores.
"The industry saw much-needed action on tariff repair, which is positive for the industry’s financial health amid ongoing large network capex. We continue to believe that the industry needs over Rs 300 ARPU at the minimum for financial stability," Vittal added.
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