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BHARTI Airtel surprised the market with a better-than-expected 21% jump in fourth quarter net profit and its first ever dividend, and said its focus on rural markets alongside high-end users had paid off in the fiercely competitive mobile market, where its rivals bank heavily on cut-price tariffs.
The country's largest mobile phone operator managed to post a net profit of Rs 2,239 crore in the three months to end-March, despite forex losses of Rs 236 crore. The company announced a maiden dividend of Rs 2 per share and said it will split its shares of Rs 10 face value into two shares of Rs 5 each.
The market was expecting a lower net profit in the wake of increased competition from rival companies. Bharti's stock closed 3% up at Rs 749.
Strong growth from rural India and dumping of 'unviable' schemes that gave away free minutes helped Bharti post an impressive 26% growth in revenues to Rs 9,825 crore. The company added 8.4 million subscribers in the quarter that saw it posting positive cash flows for the third straight quarter.
"The competitive intensity has gone up," Bharti chairman Sunil Mittal told analysts on a conference call. But the company said it would not match 'crazy introduction offers' offered by competition to corner a larger share of the world's fastest growing telecom market, which adds about 15 million users every month.
Core earnings, or earnings before interest, taxes, depreciation and amortisation (EBITDA), climbed 23% to Rs 4,001 crore for the quarter, but the company's profit margins slipped to 40.7% during the period as against 41.6% in the corresponding period last year.
"If you look at the EBITDA margins on a quarter-on-quarter basis, the dip is marginal (0.3%). This was on account of our hived off physical infrastructure companies as some of the assets were transferred to these firms during the quarter," said Bharti Airtel CEO Manoj Kohli. He said the margins could also have been affected by higher costs involved in launching mobile operations in Sri Lanka, direct-tohome and IPTV services.
Bharti had 96.6 million subscribers on March 31 this year, 50% more than the year-earlier number, and its market share increased to 24% from 23.7% in the same period last year. About 99.6% of the new subscribers added in the quarter chose pre-paid services.
Its management expressed confidence the company could sustain the growth momentum. Revenues exceed spend on network
"REVENUES are up by Rs 10,000 crore last year — there are few companies in India that have shown such growth," Mr Kohli said.
Akhil Gupta, managing director and deputy CEO of Bharti Enterprises, the group's holding company, said that the telco would stick to its commitment to invest over $3 billion this fiscal. He clarified that this figure did not include the amount that the company will spend for buying third generation (3G) spectrum to offer value-added services such as high-speed internet and video conferencing.
For the year ended March 2009, Bharti's revenues exceeded its spending on growing its networks, for the first time since 1994. Mr Gupta said Bharti would maintain the current profit margins. "Any thing above 40% is good. Our margins are sustainable," he added.
Bharti's decision to keep away from a tariff war with Reliance Communications, its closest rival that launched services based on GSM technology earlier this year, has come at a price. Bharti's market share has dipped marginally to 24% on a quarter on quarter basis, compared with 24.7% in the December quarter. Bharti only accounted for 18.4% of all cellular additions during the last quarter, when compared to just under 26% in the three-month period ending December 31,08.
But, Bharti Airtel's deputy CEO, Sanjay Kapoor said these figures cannot be seen in isolation. "We are no longer into the numbers game and direct comparisons cannot be made with our competitors since our business model is different," he said. With more than over 10 operators competing in the country's wireless space, Bharti commands 32% of the total revenues generated by the sector, he added.
Despite the optimism, there are some blips in Bharti's performance. First, the average minutes per user per month fell 4% to 485 minutes in the quarter. The average revenue per user (ARPU) per month was down by about 6% to Rs 305 in March 2009, as against Rs 324 in December 2008. On a year-on-year basis also, ARPU shrank 15%. ARPUs for all telcos have been declining in the past couple of years.
Bharti Airtel has reported improved employee efficiency of its mobile services division during the March 09. Its revenue per employee of the mobile services division increased by 7.3% sequentially to Rs 10.5 crore during the March quarter. At the end of March 09, Bharti's mobile services division had 7,832 employees as against 8,452 a year ago. Mr Kohli however clarified that the decrease in headcount was not linked with the recession and nor was it on account of layoffs. "This has got to do with the normal churn. We also outsource most of our activities and this has often led to some of our employees having to shift to those firms," he said.
The country's largest mobile phone operator managed to post a net profit of Rs 2,239 crore in the three months to end-March, despite forex losses of Rs 236 crore. The company announced a maiden dividend of Rs 2 per share and said it will split its shares of Rs 10 face value into two shares of Rs 5 each.
The market was expecting a lower net profit in the wake of increased competition from rival companies. Bharti's stock closed 3% up at Rs 749.
Strong growth from rural India and dumping of 'unviable' schemes that gave away free minutes helped Bharti post an impressive 26% growth in revenues to Rs 9,825 crore. The company added 8.4 million subscribers in the quarter that saw it posting positive cash flows for the third straight quarter.
"The competitive intensity has gone up," Bharti chairman Sunil Mittal told analysts on a conference call. But the company said it would not match 'crazy introduction offers' offered by competition to corner a larger share of the world's fastest growing telecom market, which adds about 15 million users every month.
Core earnings, or earnings before interest, taxes, depreciation and amortisation (EBITDA), climbed 23% to Rs 4,001 crore for the quarter, but the company's profit margins slipped to 40.7% during the period as against 41.6% in the corresponding period last year.
"If you look at the EBITDA margins on a quarter-on-quarter basis, the dip is marginal (0.3%). This was on account of our hived off physical infrastructure companies as some of the assets were transferred to these firms during the quarter," said Bharti Airtel CEO Manoj Kohli. He said the margins could also have been affected by higher costs involved in launching mobile operations in Sri Lanka, direct-tohome and IPTV services.
Bharti had 96.6 million subscribers on March 31 this year, 50% more than the year-earlier number, and its market share increased to 24% from 23.7% in the same period last year. About 99.6% of the new subscribers added in the quarter chose pre-paid services.
Its management expressed confidence the company could sustain the growth momentum. Revenues exceed spend on network
"REVENUES are up by Rs 10,000 crore last year — there are few companies in India that have shown such growth," Mr Kohli said.
Akhil Gupta, managing director and deputy CEO of Bharti Enterprises, the group's holding company, said that the telco would stick to its commitment to invest over $3 billion this fiscal. He clarified that this figure did not include the amount that the company will spend for buying third generation (3G) spectrum to offer value-added services such as high-speed internet and video conferencing.
For the year ended March 2009, Bharti's revenues exceeded its spending on growing its networks, for the first time since 1994. Mr Gupta said Bharti would maintain the current profit margins. "Any thing above 40% is good. Our margins are sustainable," he added.
Bharti's decision to keep away from a tariff war with Reliance Communications, its closest rival that launched services based on GSM technology earlier this year, has come at a price. Bharti's market share has dipped marginally to 24% on a quarter on quarter basis, compared with 24.7% in the December quarter. Bharti only accounted for 18.4% of all cellular additions during the last quarter, when compared to just under 26% in the three-month period ending December 31,08.
But, Bharti Airtel's deputy CEO, Sanjay Kapoor said these figures cannot be seen in isolation. "We are no longer into the numbers game and direct comparisons cannot be made with our competitors since our business model is different," he said. With more than over 10 operators competing in the country's wireless space, Bharti commands 32% of the total revenues generated by the sector, he added.
Despite the optimism, there are some blips in Bharti's performance. First, the average minutes per user per month fell 4% to 485 minutes in the quarter. The average revenue per user (ARPU) per month was down by about 6% to Rs 305 in March 2009, as against Rs 324 in December 2008. On a year-on-year basis also, ARPU shrank 15%. ARPUs for all telcos have been declining in the past couple of years.
Bharti Airtel has reported improved employee efficiency of its mobile services division during the March 09. Its revenue per employee of the mobile services division increased by 7.3% sequentially to Rs 10.5 crore during the March quarter. At the end of March 09, Bharti's mobile services division had 7,832 employees as against 8,452 a year ago. Mr Kohli however clarified that the decrease in headcount was not linked with the recession and nor was it on account of layoffs. "This has got to do with the normal churn. We also outsource most of our activities and this has often led to some of our employees having to shift to those firms," he said.
MANOJ KOHLI CEO, BHARTI AIRTEL
DESPITE a few concerns, Bharti Airtel joint MD and CEO Manoj Kohli describes FY09 as a "great year for the company" in an exclusive interview with ET NOW's Sandeep Gurumurthi.PAGE 7
DESPITE a few concerns, Bharti Airtel joint MD and CEO Manoj Kohli describes FY09 as a "great year for the company" in an exclusive interview with ET NOW's Sandeep Gurumurthi.PAGE 7
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