Airtel profit slumps 54% due to Jio effect

telecomasia.net

India's Bharti Airtel has reported a steep 54% decline in net income for its fiscal third quarter, as the operator grappled with competitive pressure from disruptive new market entrant Reliance Jio Infocomm.

Profit for the quarter ending in December fell to 5.04 billion rupees ($74.1 million), with revenue staying flat at 233.36 billion rupees.

Revenues from India grew 1.8% year-on-year, despite a slowdown in mobile revenue growth due to the competition posed by Reliance Jio, which has been offering free voice and data services as a promotional exercise since launching LTE services nationwide in September.

Mobile data revenues also declined 3% year-on-year to 30.37 billion rupees, despite a 22% increase in mobile broadband customers to 37.7 million.

“The quarter has seen turbulence due to the continued predatory pricing by a new operator,” Airtel CEO for India and South Asia Gopal Vittal commented.

“The present termination costs at 14 paise which are well below cost has resulted in a tsunami of minutes terminating into our network. This has led to an unprecedented year on year revenue decline for the [Indian telecoms] industry, pressure on margins and a serious impact on the financial health of the sector.”

But he noted that despite the competitive pressures, Airtel's revenue market share in India grew to a record-high 33%. The company's Indian mobile base also grew 2.3% quarter-on-quarter to 265.85 million.

Airtel's other Indian businesses, including digital TV, business services and home broadband, also recorded healthy year-on-year growth.

African revenues meanwhile grew 6% year-on-year in constant currency terms – the highest in the past nine quarters. Data revenues grew 24% to $153 million, with data customers growing 21.3% and traffic up 91%.

Airtel CEO for Africa Raghunath Mandava said Africa is now generating positive free cash and is profit before tax positive in constant currency.

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