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Bharti Airtel may change thought on African operations following $52m profit in Q1

…May revise to join in bid for 9Mobile

Parent company of Airtel Nigeria, Bharti Airtel who recently created an impression of reducing stakes in Africa may begin to change its mindset considering a strong profit of about $52million  it recorded in quarter one (Q1), against $78million losses a year ago.

Analysts say the rise in profit which stemmed from growth in data customers and consumption especially in Nigeria and others may encourage the group to join bid for 9Mobile who several Nigerians believe has a strong grip in data services.

Before now, the company said hard times especially in Africa is forcing it trim down stakes. It went as far as short listing about six economies where it is likely to reduce stakes in Africa and later kept mute on the matter till its recent positive half year financial report.

Leading global telecoms magazine, Economic Times Telecoms, recently revealed that Bharti Airtel had almost 380 million customers across India, South Asia, and 15 countries in Africa at the end of June this year.

In India, which makes up about 78 per cent of overall revenue, the company had about 281 million mobile subscribers, up 2.6 per cent from the March quarter.

Collectively, the firm reported that the percentage of users leaving the network rose to 3.8 per cent from 3.6 per cent in the Q1due to competitive pressures.

According to the released report, Bharti Airtel’s quarterly net profit slumped 75 per cent to the lowest level in four and a half years, as its voice and data businesses continued to suffer from the price war triggered by Reliance Jio Infocomm’s dirt cheap offerings, most especially in the Indian market.

Its revenue declined 14 per cent to Rs 21,958 crore from a year earlier, as data and voice rates fell. It was higher than Rs 21,935 crore in the quarter ended March, which some analysts said indicated slight easing of pressure after three successive quarterly declines. Revenue from India dropped 10 per cent year on year.

Lower voice and data rates meant Airtel’s customers made more calls, and used more mobile internet, but not enough to boost overall revenue.

In a statement, the Managing Director and Chief Executive Officer of Airtel India & South Asia, Gopal Vittal, said “The pricing disruption in the Indian telecom market caused by the entry of a new operator continued with industry revenues declining over 15 per cent Y-o-Y, creating further stress on sector profitability, cash flows and leverage. Consequently, our revenues declined 10 per cent and earnings before interest, taxes, depreciation and amortisation (EBITDA) margin eroded by 5.3 per cent on year.”

Continuing, Vittal claimed that the fall in rates resulted in data usage tripling and voice traffic growth of 34 per cent on year. “We also added 5.2 million data customers in the last quarter – our highest ever”.

The Chief Executive for Africa, Raghunath Mandava, said “Organic revenue growth for the quarter was 1.5 per cent Y-o-Y, though our efforts to optimise unprofitable revenue streams resulted in higher net revenue growth of 3.3 per cent.

Within the period, data consumption and revenue increased by 75 per cent and 11.3 per cent, respectively, on year.

Also, new Know your customer (KYC) norms impacted customer additions and consequently revenue growth in the quarter.