Q1 Results: Bharti Airtel’s Biggest Loss Since Listing Masks Business Recovery

Bharti Airtel Ltd. reported its biggest loss since going public in 2002. But that masks the underlying recovery the telecom operator has made since it changed strategy to focus on fewer, better-paying users.

Billionaire Sunil Mittal’s wireless carrier was among the worst-hit since the launch of Mukesh Ambani’s Reliance Jio Infocomm Ltd. Airtel’s ARPU fell by half in two years of Jio’s arrival. But a shift in strategy to shed flab by deactivating low revenue generating customers and raising prices of its lowest tariff plans are now aiding ARPU.

And adoption of the Ind AS 116 accounting standard also aided numbers. Operating profit was higher by 1,512.3 crore due to Ind AS, while revenue was Rs 26.5 crore higher.

Yet, its Indian business’ performance, even after adjusting for Ind AS, improved due to lower customer churn, increasing data subscribers and higher ARPU.

• India revenue grew 2.2 percent to Rs 10,867 crore.
• Domestic operating profit increased 51 percent to Rs 3,874 crore. Adjusting for Ind AS, it stands at Rs 2,518 crore.
• Adjusted ARPU in India stood at Rs 127, the highest in seven quarters.

Airtel was able to increase its 4G subscriber base to 9.5 crore from 8.7 crore earlier. That was despite cutting down about 15 lakh customers. The churn ratio—average number of customers which quit the network—also declined to 2.6 percent from 2.8 percent.

Other Highlights

• Consolidated capital expenditure stood at Rs 5,047 crore compared with Rs 6,274 crore in the previous quarter.
• Net debt, excluding lease obligation, reduced by 22 percent to Rs 88,449 crore versus Rs 1.12 lakh crore.
• The debt was lower due to fundraising initiatives of the company.

Shares of Bharti Airtel closed 4.1 percent lower ahead of the results announcement compared with the benchmark BSE Sensex’s 1.23 percent fall.