Bharti Airtel Net Income Falls 31% on Currency Costs, Spectrum

  • Company’s average revenue per user in India declines 1.3%
  • Mobile data 24% of India revenue versus 19% a year earlier

Bharti Airtel Ltd. profit fell as higher spectrum costs and a foreign-exchange loss due to the devaluation of the Nigerian naira eroded gains from higher sales.

Net income declined 31 percent to 14.6 billion rupees ($217 million) in the quarter ended June 30, the company reported on Wednesday. Revenue rose 8 percent to 255.7 billion rupees. Airtel said it had a net foreign-exchange loss of 7.5 billion rupees driven by a devaluation in the Nigerian currency. The company’s average revenue per user in India weakened 1.3 percent to 196 rupees.

Bharti, controlled by billionaire Sunil Mittal, is preparing to fend off a new wireless carrier by billionaire Mukesh Ambani that’s planning to start offering fourth-generation services nationwide as early as next month. To keep up, Bharti has plowed $1.2 billion this year into buying airwaves to extend 4G services across a country where 10 carriers battle for market share, keeping margins thin.

Airtel said it will offer prepaid customers as much as 67 percent more data for the same fees, according to a statement July 17. The company said Wednesday that high-spectrum costs resulted in a deterioration in return on capital employed to 7.6 percent compared with 8.6 percent a year earlier.

Ambani’s planned service Jio, which is expected to offer high-speed data cheaply to lure users, faces a rate fight from Bharti and others. Jio has missed multiple deadlines for offering services to the public, giving rivals time to improve their networks and come up with revised plans.

Revenue from data services rose 34 percent to 46.4 billion rupees, according to the statement. The company’s shares rose 0.7 percent at the close of trading in Mumbai before earnings were released.