India’s leading private telecom service provider Airtel has announced its first quarter results for 2017 which has stunned the investors and the industry as a whole. The telecom behemoth which has seen profits rise from year on year until 201,for the first time has reported a sharp drop in its Net Profits and Operating Margins. All thanks to telecom disruptor Jio whch has brought down the charges on both data and calls crashing.
The net profit for the first quarter of 2017-18 stood at Rs 367 crore (Rs 3.67 bilion) which was 74.9 per cent lower when compared to the previous year. The June quarter net profit is the lowest since December 2012 for Bharti Airtel.
The company’s total revenue fell by 14 per cent to Rs 21,958 crore (Rs 219.58 billion) during the quarter from Rs 25,546 crore (Rs 255.46 billion) in the corresponding period of last year. Some of this is also attributed to currency depreciation in the African markets.
“The pricing disruption in the Indian telecom market caused by the entry of a new operator continued with industry revenues declining over 15 per cent year-on-year, creating further stress on sector profitability, cash flows and leverage,” Gopal Vittal, MD and CEO, India and South Asia, Bharti Airtel said without directly naming the new entrant.
Bharti Airtel’s consolidated net debt has decreased to Rs 87,840 crore (Rs 878.4 billion) from Rs 91,400 crore (Rs 914 billion) in the previous quarter.
“Lower EBITDA along with rising spectrum interest and amortisation costs has resulted in deterioration of Return on Capital Employed (ROCE) to 5.6 per cent from 7.6 per cent in the corresponding quarter last year,” the statement from Airtel said.