Bharti Airtel Misses Estimates on Nigeria Hit, 5G Roll Out
(Bloomberg) -- Bharti Airtel Ltd. reported lower-than-expected quarterly profit as India's second-biggest wireless phone operator intensified its 5G network roll out and took a foreign-exchange hit on its Nigerian business.
The firm controlled by billionaire Sunil Bharti Mittal posted a net profit of 16.1 billion rupees ($195 million) for the quarter ended June, according to a statement Thursday. That undershot the average 28.61 billion-rupee net profit estimated by analysts surveyed by Bloomberg.
Revenue rose 14% to 374.4 billion rupees, while costs advanced 9.6%.
Bharti Airtel's earnings were impacted by a one-time foreign-exchange loss of 34.2 billion rupees in Nigeria. The company's biggest African market devalued its currency when President Bola Tinubu took office earlier this year and announced sweeping changes to Nigeria's distorted system of multiple exchange rates. The firm's Africa subsidiary in June called Tinubu's actions “a positive move towards a more stable Nigerian FX market.”
KEY INSIGHTS
- Bharti Airtel, which had about 382.8 million subscribers in India as of end-June, second only to Reliance Jio Infocomm Ltd.'s 448.5 million users, is awaiting the next round of tariff hikes in 2023 to bolster its revenue. The last price hike was in 2021.
- The company added 5.6 million new 4G customers and the highest-ever postpaid customers in any quarter, Managing Director Gopal Vittal said in the statement.
- All Indian telcos are heavily investing in 5G networks, hoping it will revolutionize everything from gaming, manufacturing and health care. That expansion may decide who dominates India's digital era amid rising uptake of smartphones in the world's most populous country.
- India's roll out of 5G technology is also in focus as operators in China and South Korea struggle to recoup investment years after its introduction.
- Bharti Airtel has prepaid 80.24 billion rupees to the Indian government for airwaves acquired in an auction in 2015.
- The company used “much lower cost financing” to repay the liability that had an interest rate of 10%.
- Bharti shares closed at 871.7 rupees, registering a 0.7% decline in Mumbai.
- Earnings were announced after the close of India trading hours.
- India mobile ARPU was at 200 rupees
- Consolidated Ebitda margin 52.7% vs 50.6% y/y
- Net debt $25.32 billion, -2.2% q/q
Market Reaction
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