Bharti Airtel: Back in black

Bharti Airtel: Back in black

Shares of Bharti Airtel eased a percent even after India’s largest listed telecom services provider returned to profit during the fiscal third quarter to December 2020.
On Wednesday, the Sunil Bharti Mittal owned telecom services provider posted a consolidated net profit of Rs 854 crore in the quarter ended December 2020 (Q3 of FY21), after six straight quarters of losses. However, its Indian operations, despite a substantial improvement in financial performance, are still in the red — its net income from Indian operations, without considering exceptional items, was negative Rs 9.6 crore, compared with a loss of Rs 682.5 crore in the previous quarter.

While its average revenue per user (ARPU) went up by 2.4% from Rs 162 in Q2 to Rs 166 this quarter, it was lower than that of Reliance Jio, which saw 4% growth in the same period. The two companies have been neck and neck on Ebitda (earnings before interest, tax, depreciation, and amortisation) margins. Bharti’s Ebitda as a percentage of revenue stood at 45.2% and that of Jio was at 44.2%.
Airtel’s revenues in India grew by 5.4% from Rs 18,022 crore in Q2 to Rs 19,007 crore in Q3. Its rival Jio saw a 6% increase in the same period.

The company announced it would be raising up to Rs 7,500 crore through a combination of instruments, which include secured and unsecured, listed and unlisted non-convertible debt securities, including debentures and bonds. These would be raised in one or more tranches. The company has a debt of Rs 1.49 trillion, which is three times its Ebitda.
Bharti Airtel’s earnings are boosted by healthy net subscriber additions, increase in higher paying 4G customers, and gains from one-time exceptional items like the deemed loss of control in its tower business (merged with Indus Towers and some others). Airtel declared its highest ever consolidated quarterly revenue of Rs 26,518 crore in Q3, up by over 24.2% a year ago.

The company has had to make steep provisions, especially to pay for its AGR dues to the government as directed by the Supreme Court. The company’s Indian operations saw a healthy increase in net subscriber addition of 14. 2 million, nearly three times more than that of Jio.

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