With stiff competition at home and increased tax rate in its newly acquired entity in Africa, leading private telecom operator Bharti Airtel on Wednesday reported a 26.53 per cent dip in its net profit for the second quarter ended September 30.
Bharti's results included its new African operations that it acquired in June from Kuwaiti telecom group Zain for $9 billion, to become the world's fifth-biggest mobile operator.
Its net profit fell to Rs 1,661.2 crore under the international accounting standards for the second quarter ended September 30, from Rs 2,263 crore in the same period a year earlier.
The effective tax rate in the second quarter increased to 25.5 per cent from 10.6 per cent in the corresponding period last year on the back of the company's Africa-based operations. This was one of the major reasons for the drop in profit.
Despite the dip in profit, the telecom major's total revenue rose 46.6 per cent to Rs 1,52,15 crore, from Rs 1,03,78 crore in the same period last year, boosted by revenue from its acquisition in Africa. Bharti's last year figures do not include numbers from its Africa operations.
Revenues from operations in Africa stood at Rs 3,891 crore from Rs 958 crore in April-June quarter. In the June quarter, only 23 days of African operations were taken into account, effective from June 8.
The monthly average revenue per user - a key indicator of profitability - dropped 6 per cent to Rs 202, from Rs 215 in the last quarter, despite a stable pricing environment. The Indian market, where the tariffs are as low as 50 paise per second, saw no significant fall in prices in July-September quarter.
Bharti's EBITDA (earnings before interest, taxes, depreciation and amortisation) margin, a key gauge of profitability, fell to 33.7 per cent in the July-September quarter from 41.4 per cent in the year-ago period.
The company is betting on growth in Africa, where the mobile penetration level is less than India's 54 per cent and there are fewer competitors.
Some analysts say the worst may be over for pricing in the Indian telecom sector. Minutes of usage declined by 6 per cent to 454 minutes, from 480 minutes in June quarter.
Bharti, with about 143 million users in India, enjoys over 20 per cent of the market. It is also present in Bangladesh and Sri Lanka.
Reacting to the numbers, shares of the company were also trading lower on the Bombay Stock Exchange.
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