Bharti Profit Falls as Competition Mounts Ahead of Jio Entryby
Net income drops 22% to 11.2 billion rupees, misses estimate
Group net debt at $7.35 billion; data ARPU reaches 200 rupees
Bharti Airtel Ltd. reported its first profit drop in nine quarters as India’s largest wireless operator faced stiffer competition, which may only intensify as mobile-phone carriers brace for the country’s richest tycoon to enter the industry later this year.
Net income fell 22 percent to 11.2 billion rupees ($164 million) in the quarter through December, missing the 12.3 billion-rupee average estimate compiled by Bloomberg. Idea Cellular Ltd., the nation’s third-largest carrier, also reported earnings that were below analysts’ estimates last week.
Even with a billion subscriptions, Indian phone carriers are under mounting pressure to consolidate as a dozen carriers battle for market share and pile on debt to invest in infrastructure. Looming for the incumbents is the imminent entry of the 13th operator, a carrier controlled by billionaire Mukesh Ambani, which is planning to enter the industry this year with fourth-generation services. Bharti had a net group debt of $7.35 billion, excluding deferred payments to the government, it said in a statement on Thursday.
Bharti’s billionaire Chairman Sunil Mittal had warned that Ambani’s entry could shake up the telecommunications industry and force smaller players to exit or merge with larger ones. Bharti, India’s first operator to offer 4G services, plans to spend 600 billion rupees over three years to improve its network and help fend off competition. Vodafone Group Plc’s local unit and Idea have also started the speedier services.
Concerns about added competition brought on by the entry of Jio, the telecom unit of Ambani’s flagship Reliance Industries Ltd., prompted Fitch Ratings to downgrade its 2016 outlook for the Indian phone industry to negative from stable in November.
Bharti’s total revenue last quarter rose 3.8 percent from a year earlier to 241 billion rupees, still short of the average estimate of 244.5 billion rupees.
Data usage is accelerating, with the average data revenue per user reaching 200 rupees, Bharti said in the statement. The carrier added a net 8.1 million customers during the quarter.
The operator also announced the merger of its Bangladesh unit with Robi Axiata Ltd. to form a larger wireless carrier that will have 40 million subscribers. It will hold 25 percent stake in the merged entity.
Bharti had announced the sale of its units in Burkina Faso and Sierra Leone to Orange SA this month as it scales back its African operations. The deal, estimated to be worth about $800 million, will help the operator pay off part of its $10 billion debt pile, according to a Jan. 14 note by local brokerage ICICI Securities Ltd.
Bharti shares fell 2.2 percent to 291.4 rupees in Mumbai on Thursday, extending this year’s loss to 14 percent versus the 17 percent drop in the 13-stock S&P BSE Telecom Index. Earnings were announced after trading hours.