Bharti Airtel Ltd, the country's largest telco, on Tuesday said its net profit for the July-September quarter plunged by a whopping 77 percent from a year earlier, as it struggled with the fierce price war unleashed by Mukesh Ambani-led Reliance Jio. Airtel net profit for the second quarter was whittled down to a mere Rs 343 crore from a robust Rs 1,461 crore in the July- September quarter of 2016-17.
Airtel's second quarter net profit is its smallest in 19 quarters and its sixth consecutive drop in quarterly profit. Indian telecom operators have been hit by the entry of Reliance Jio which has been offering free voice calls and data at dirt-cheap prices. The sector faces further price pressure after Trai recently cut the fee operators pay each other for calls made from one network to another.
"The financial stress in the industry continues due to double digit revenue decline and will be further accentuated by the reduction in interconnect usage charges in the next quarter," Gopal Vittal, Bharti Airtel's chief executive for India and South Asia, said in a statement. That will eventually lead some operators to either consolidate or exit the market, he added.
Vodafone and Idea Cellular are in the process of combining their operations in India. The merger will potentially create the biggest Indian telecoms company, surpassing Airtel, which recently increased its customer base with its acquisition of the Tata conglomerate's consumer mobile business. Airtel's total revenue fell 11.7 per cent to Rs 21,777 crore during the second quarter of 2017-18, from Rs 24,651.50 crore in the year-ago period. The companys consolidated net debt rose to Rs 91,480 crore against Rs 87,840 crore in the previous quarter.
The company said it had stepped up the capex investments in the quarter on the back of data coverage and capacity. Net debt excluding the deferred payment liabilities to the Telecom Department and finance lease obligations increased by Rs 2,554 crore sequentially in the quarter, the company added.
Bharti Airtel's net interest costs increased to Rs 1,905 crore compared to Rs 1,603 crore in the same quarter last year. 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 said