Massive setback for Airtel in Q2FY19; Sunil Mittal led telco posts 65% decline in profit at Rs 118.8 cr

The largest telecom service provider Bharti Airtel has announced its second quarter result for FY19 (Q2FY19). Although the Q2FY19 result was quite weak for Bharti Airtel, it was still far better than what analysts had expected. Airtel posted consolidated net profit of Rs 118.8 crore declining by 65% from Rs 343 crore recorded in corresponding period of previous year. A Bloomberg poll of analysts had predicted Airtel to report net losses in its book of Rs 828 crore during Q2FY19. 

Meanwhile, total consolidated revenue stood at Rs 20,422.5 crore which was down by 6% from Rs 21,776.9 crore a year ago same period. 

Airtel's EBITDA (operating profit) stood at Rs 6,343.3 crore, witnessing fall of 21% as against Rs 8,003.7 crore in Q2FY18. 

EBITDA margins also decelerated to 31.1%  in Q2FY19 from previous 36.8% in Q2FY18. 

Gopal Vittal, MD and CEO, India & South Asia, said,  “Led by our focus on quality customers through simplified pricing and content partnerships, ARPU decline has moderated in this quarter. We remain focused on driving quality base growth with value adding propositions for our customers. We also remain committed to investing in enhanced capacities and have deployed 27K+ broadband sites during the quarter, enabling a 239% YoY growth in mobile data volumes.”

Consolidated mobile data traffic at 2,758 billion MBs in the quarter has registered a healthy Y-o-Y growth of 225%.

In India, Airtel's revenues for Q2FY19 was at Rs 14,920 crore declining by 3.6% Y-o-Y (declined 10.9% on reported) on an underlying basis. Mobile revenues have witnessed a Y-o-Y de-growth of 7.2% on an underlying basis led by continued ARPU down-trading impacted by competitive pricing pressures. 

Other businesses continue to witness a healthy Y-o-Y growth. Digital TV revenue has crossed Rs 10 Bn mark with a 9.3% growth and Airtel Business has witnessed a growth of 22.8% on an underlying basis. 

Furthermore, in India, Airtel's mobile data traffic has more than tripled to Rs 2,660 billion MBs in the quarter as compared to 784 Bn MBs in the corresponding quarter last year. Mobile 4G data customers increased by 132.2% to 65.7 Mn from 28.3 Mn in the corresponding quarter last year.

In constant currency terms, Africa revenues grew by 10.8% Y-o-Y led by strong growth in data and Airtel money transaction value. Mobile data traffic has grown by 53% to 89 Bn MBs in the quarter as compared to 58 Bn MBs in the same quarter last year. Data customers increased by 32.1% to 27.1 Mn from 20.5 Mn in the corresponding quarter last year. 

Overall Airtel's customer base stands at 445 million across 16 countries in Q2FY19, up 15.1% Y-o-Y excluding divested units.

Total Capex spends for the quarter stood at Rs 7,685 crore. Year-to-date spends were at Rs 15,901 crore.

Additionally, the company's board has declared an interim dividend of Rs 2.5 per share, which is a complete pass through of dividend received from its subsidiary. 

Ahead of the result announcement, investors have dampened Airtel's share price to extreme levels. The stock closed at Rs 295.85 per piece, down by Rs 20.90 or 6.60%.