Reliance Jio effect: Airtel reports decline in net profits

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India's largest telecom service provider Bharti Airtel has reported 72 percent decline in net profits at Rs. 373 crore for the fourth quarter that ended on March 31 compared to Rs. 1,319 crore in the corresponding quarter last year.

Reliance Jio effect: Airtel reports decline in net profits

Gopal Vittal, MD and CEO, India & South Asia, said: "the sustained predatory pricing by the new operator has led to a decline in revenue growth for the second
quarter in a row. The telecom industry as a whole also witnessed a revenue decline for the first time ever on a full year basis. The deteriorating health of the industry was compounded by the tsunami of incoming voice traffic from the new operator as a result of which significant investments had to be made just to carry the incoming traffic on our network. The net result of this was a revenue decline of 7.1 percent in Q4 even as EBITDA margins eroded by 2.9 percent. FY 16-17 saw a muted top-line growth of 3.6 percent vs the double-digit growth witnessed in preceding years."

He said, "Our long-term commitment to provide the best experience to our customers continues to drive all our actions in every single aspect of the business. This belief coupled with the brilliant execution of our people has led to the acceleration in market share in an industry that is now rapidly consolidating".

The company says that they have added significant data capacities by rolling out +72K incremental mobile broadband base stations vs last year, and customers increased by 20.5 percent to 42.7 million from 35.5 million in the corresponding quarter last year, while mobile data revenues now contribute to 21.5 percent of mobile India revenues vis-à-vis 23.3 percent in the corresponding quarter last year.

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However, Airtel's Africa operations reported a profit before tax (PBT) for the first time during the year that ended on March 31. The African unit reported a PBT of $33 million compared to a loss of $159 million in the previous year.

In a statement, Raghunath Mandava, MD, and CEO, Africa, said: "Airtel Africa underlying revenues grew by 4.4 percent in constant currency terms during FY 16-17 with net revenues up a healthy 5.0 percent as we shed unprofitable lines. Revenue market shares in our key geographies continue to accelerate. Our efforts to deliver a profitable business model for Africa has resulted in EBITDA growth of 36.0 percent with margin expanding by +500 basis points on an underlying basis in FY 16-17. For the first time ever, African operation has delivered positive PBT in the financial year (constant currency)."

He added, "Data consumption and revenues have grown by 95.5 percent & 23.5 percent respectively in FY 16-17. We remain focused on accelerating growth through improved customer experience and superior network quality".

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