Bharti Airtel, the country's largest mobile telecom company, has come out with first quarter results which are ahead of market expectations. The company has managed double digit growth in both top line and bottom line even on a sequential basis and the declining trend in average subscriber revenues has been arrested.
Consolidated net profits for the quarter ended 30 June 2006 increased 48.09 per cent to Rs 755.1 crore from Rs 509.9 crore for the previous year quarter. Consolidated revenues increased 53.2 per cent to Rs 3,856.4 crore from Rs 2,517.3 crore for Q1 2005-06.
On a sequential basis, net profits have gone up 10.67 per cent from Rs 682.3 crore reported for the quarter ended March 2006 on a revenue growth of 13.05 per cent from Rs 3,411.3 crore.
Operating profits or EBITDA, excluding other income, for the quarter were higher by 59.68 per cent as compared to the previous year quarter. Operating margins as a percentage of revenues expanded to 38.95 per cent from 37.37 per cent a year ago. Operating margins were 37.5 per cent during the Jan-March 2006 quarter.
The expansion in margins was mostly a result of tighter control on operating expenses. Cost of services rendered increased 48.56 per cent over the previous year quarter, lower than the rise in revenues. Selling, staff and administrative expenses were higher by 49.83 per cent over the prior year quarter.
Within the cost of services rendered, license fee paid increased 36.33 per cent while access and interconnect charges went up by 39.03 per cent over the previous year quarter.
Net interest costs jumped substantially to Rs 169.2 crore for the quarter as compared to Rs 14.9 crore for the prior year quarter. Other income was higher by 85.19 per cent at Rs 25 crore as compared to Rs 13.5 crore for Q1 2005-06.
The company had 2.46 crore subscribers as of the end of the quarter as compared to 1.32 crore as at the end of previous year quarter and 2.09 crore subscribers as of end March 2006. Total number of mobile services subscribers were 2.31 crore as compared to 1.23 crore as at the end of previous year quarter.
In mobile services the percentage of prepaid subscribers continued to rise, indicating that a substantial part of the new additions are coming at the lower end of the customer base. Prepaid subscribers as a percentage of total mobile subscribers stood at 84.4 per cent as compared to 75.7 per cent as at the end of previous year quarter and 82.7 per cent as of end March 2006.
Despite the rising percentage of prepaid customers, who are generally low spenders, average revenues per customer (ARPU) held steady at Rs 441 as against Rs 442 for the Jan-March 2006 quarter. However, on a year-on-year basis, ARPU declined from Rs 491 for the previous year quarter.
ARPU has been held steady, despite the fall in call charges, by rising usage. Average usage per month per user increased to 441 minutes during the quarter from 431 minutes during Jan-March 2006 quarter and 383 minutes for the previous year quarter.
Bharti Airtel continues to do a good job in retaining its subscribers. Subscription cancellations among prepaid users have been brought down to 4.7 per cent during the quarter from 5.2 per cent for Jan-March 2006 quarter and 6.7 per cent a year ago. Cancellations among postpaid subscribers have also declined to 3.4 per cent from 4.1 per cent and 3.9 per cent respectively.
The company has expanded its mobile telecom services to 4,026 towns and cities as at the end of the quarter as against 3,778 towns and cities as of end March 2006. The company now covers 1.02 lakh smaller towns and villages as compared to 80,687 as of end March 2006. Airtel now offers broadband and fixed telephony services in 92 cities and towns as compared to 90 cities as of end March 2006.