Indian phone market price war hits Bharti Airtel's quarterly profit

The company via its partnerships will provide users an array of low-cost smartphone choices to select from if they upgrade to an Airtel 4G connection

Bharti Infratel Q2 profit falls 17% to Rs638 crore

The net profit stood at about Rs774 crore in the same quarter last fiscal.

The consolidated revenues for just-ended quarter, at Rs 21,777 crore, represented a year on year drop of 10.4 per cent (reported drop of 11.7 per cent) on an underlying basis (that is adjusted for Africa and Bangladesh divested operating units and tower assets sale), Airtel said. The revenue during July-September quarter jumped almost 11% to Rs3,648 crore from Rs3,292 crore in the year- ago period, according to a company statement. The mobile market continues to experience value erosion and financial stress led by competitive pressures. The consolidated revenues earned by the company during the second quarter of the current fiscal slipped to Rs 21,777 crore, falling 11.7 per cent, a statement by Bharti Airtel said. "This will eventually force operator consolidation and exits as we have witnessed in the recent past", Gopal Vittal, managing director and chief executive, India and South Asia, Airtel, said. "Mobile broadband customers increased by 33.6% to 55.2 million from 41.3 million in the corresponding quarter previous year", Airtel said.

"Airtel remains committed to its goal of increasing revenue market share in this competitive environment by providing superior customer experience and strategically investing behind building more data capacities", Vittal added.

Reliance Jio, backed by India's richest person Mukesh Ambani, started commercial operations on September 5 with free voice and data offers that continued till March end.

Data traffic has grown fourfold to to 784 billion MBs. Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 17.4 percent to Rs 7,922 crore, while EBITDA margin contracted to 36.4 percent from 30.72 percent in the previous quarter, the company said.

It can be recalled that Reliance Jio had launched its services, offering all services free of cost, exactly at the same time past year.

Quarterly net finance cost rose by Rs 420.9 crore on year, with consolidated net debt totalling Rs 91,480 crore compared with Rs 81,480 crore a year ago.

The Africa market fared better with revenue rising 2.8 per cent on an underlying basis, while the operating profit margins improved over 9 per cent year-on-year buoyed by "continuous cost control initiatives".

Mayuresh Joshi, Angel Broking fund manager and sector expert, wasn't surprised by the sharp drop in Airtel's net profit, "as the July-September period is, typically, a seasonally weak quarter".

Bharti Airtel shares gained 1% to Rs 497.65 at the close on the BSE on Tuesday. The move is also set to consolidate Bharti's leadership in India's mobile phone market, which was imperiled by the merger of second- and third-ranked Vodafone India and Idea Cellular.

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