Airtel Posts Massive Loss in Last Quarter, Hints at a Tariff Hike

Bharti Airtel continues to bleed with the Sunil Mittal company posting a consolidated net loss of Rs. 1,035 crores in Q3 (October-December) against a net profit of Rs. 86 crores in the same period of the last fiscal.

The company hinted at further hike in tariffs with CEO Gopal Vittal stating tariffs must go up further for enabling the industry to invest in emerging technologies.

The consolidated revenues for Q3, however, at Rs. 21,947 crores, grew 10.5 percent Y-o-Y (reported increase of 8.5 percent Y-o-Y) on an underlying basis. Consolidated mobile data traffic, at 5,357 PBs in the quarter, registered a healthy Y-o-Y growth of 73 per cent.

Shares of Bharti Airtel ended at Rs. 519.1, up by Rs. 8.80, or 1.72 percent, on the BSE.

The consolidated EBITDA margin increased by 11.4 percent to 42.6 percent in the quarter as compared to 31.2 percent in the corresponding quarter last year. Consolidated EBIT increased by 195.2 percent YoY to Rs. 2,401 crores.

The consolidated net loss before exceptional items for the quarter stands at Rs. 1,080 crores, the company said.

India revenues for Q3, at Rs. 15,797 crores, have increased by 9.7 percent Y-o-Y (reported increase of 7 percent Y-o-Y) on an underlying basis. Mobile revenues have witnessed a Y-o-Y growth of 9.6 percent led by a strong focus on quality customers, up-trading and in some part, benefitted by the recent tariff actions, although the full impact of the tariff actions is yet to be seen. Consequently, ARPU has improved from Rs. 128 to 135 Q-o-Q.

Mobile data traffic has increased to 5,166 PBs in the quarter as compared to 2,996 PBs in the corresponding quarter last year. Mobile 4G data customers increased by 60.6 percent to 123.8 million from 77.1 million in the corresponding quarter last year.

This quarter witnessed strong 4G customer additions of 21 million.

Digital TV revenue witnessed a growth of 15.6 percent Y-o-Y on an underlying basis (decline of 23.3 percent on reported basis due to reporting changes in DTH pursuant to the new tariff order). Airtel Business revenue witnessed a growth of 6.6 percent on Y-o-Y basis.

Consolidated EBITDA at Rs. 9,350 crores increased 48.3 percent Y-o-Y. Consolidated EBITDA margin increased by 11.4 percent to 42.6 percent in the quarter as compared to 31.2 percent in the corresponding quarter last year. Consolidated EBIT increased by 195.2 percent Y-o-Y to Rs. 2,401 crores.

The Consolidated Net Loss before exceptional items for the quarter stands at Rs. 1,080 crores. The Consolidated Net Loss after exceptional items for the quarter stands at Rs. 1,035 crores.

Vittal, MD and CEO, India & South Asia, said: "We added 21 million 4G customers to our mobile network and delivered superior value to our customers through the Airtel Thanks programme. Data traffic saw strong growth of 72 percent Y-o-Y. We are on track to shut down our 3G networks across India and re-farm the 900 and 2100 band spectrum to further boost our 4G footprint to serve the surging demand for high speed data.

"While tariff revision undertaken in December 2019 is a welcome step towards repairing the financial health of the industry, we believe tariffs must go up further for enabling the industry to invest in emerging technologies," he added.

Airtel's results come as the apex court is slated to hear Bharti Airtel's petition to modify its October 24 order that made the company liable to pay Rs. 35,586 crores of adjusted gross revenue (AGR) dues by January 23. Vodafone Idea and Tata Teleservices have also filed pleas to seek more time to pay AGR related dues though the telcos want to negotiate a staggered payment schedule with the Department of Telecommunications (DoT), which has issued demand notices worth over Rs 1 trillion for revenue share, interest, and penalty.

Ending a 14-year court battle, the Supreme Court on October 24 upheld the government's definition of revenue, on which it calculates levies on telecom operators, dealing a body blow to the telecom industry, which is already burdened with falling tariffs and mounting debt.