Airtel Q3 Results: Topline gains but bottom-line down 27% QoQ, misses estimate

Profit Decline - Telecom major, Bharti Airtel, reported a consolidated net profit of Rs 830 crore for the December quarter, a fall of 2.8% YoY. In the year-ago period, the net profit was Rs 854 crore. Sequentially, the net profit was down by 27%. The net profit is well below the street estimate of Rs 1,581.3 crore.

Revenue increase - The revenue reported by the company for Q3FY22 is Rs 29,867 crore against Rs 26,518 crore in the year-ago period. The revenue increase was on the back of recent tariff hikes and subscriber addition. The operating profit in the quarter rose 6.3% to Rs 14,905 crore. The revenue is in line with analysts' expectations of Rs 29,801 crore.

Segment revenue: India business posts quarterly revenues of Rs 20,913 crore – up 17.9% YoY. Mobile services India revenues up 19.1% YoY, led by increase in ARPU. Airtel Business revenues up by 13.4% YoY backed by continued strong demand for data portfolio and emerging businesses. Homes business continues to have a robust revenue growth, up 40.4% YoY led by strong customer additions. Digital TV continues to improve its market position with steady revenue and customer base

EBITDA - The company reported consolidated EBITDA of Rs 14,905 crore in Q3FY22, a growth of 22% YoY. The consolidated EBITDA margin came at 49.9%, up 4% YoY. EBITDA expansion was broad-based, and the portfolio remains well balanced with India non-mobile and Africa business contributing 17% and 30.1%, respectively, and India mobile contributing 52.9%.

Operations - 4G customers up by 29.9 Mn YoY & 3.0 Mn QoQ to reach 195.5 Mn, 61% of overall customer base. Mobile data consumption up by 33.8% YoY, consumption per customer at 18.3 GB per month. Homes business witnessed continual customer net additions, 341K additions. Digital TV's customer base is strong at 18.1 Mn. Airtel Payments Bank continues to witness accelerated adoption leading to increase in monthly transacting users by 46 % YoY, thereby expanding revenue and profit margin 

ARPU - The Average Revenue Per User increased to Rs 163 in Q3FY22 as against Rs 146 in Q3FY21. The mobile services revenue was by 19.1% YoY on a comparable basis. Sequentially, the ARPU was up 5.9% from Rs 153 in the September quarter.

Airtel and Google partner - Airtel and Google partner to help grow India’s digital ecosystem. Google to invest up to $1 Billion in partnership with Airtel as part of its Google for India Digitization Fund. The deal includes an investment of $700 Mn to acquire 1.28% ownership in Airtel and up to $300 Mn towards potential multi-year commercial agreements. The partnership will focus on enabling affordable access to smartphones across price ranges, explore use cases for 5G and help accelerate the cloud ecosystem for businesses across India.

Interest cost savings - Airtel paid Rs 15,519 crore to the Department of Telecom (Government of India) towards prepayment of the entire deferred liabilities about spectrum acquired in an auction of the year 2014. These liabilities were due in annual installments from FY 2026-2027 to 2031-2032 and carried an interest rate of 10% (the highest rate amongst the deferred liabilities and borrowings) and an average residual life of 7+ years. The company estimates that the prepayment will likely result in interest cost savings of at least Rs 3,400 crore over the residual life for fully substituted capital.

Rights Issue - Airtel successfully completed the application money leg of Rights Issue of up to Rs 20,987 crore with a subscription of approx 1.44 times, overbid by both public and promoter/promoter groups. Airtel allotted 392,287,662 Rights Equity Shares to the eligible applicants, with Rs 133.75 per share paid on application and balance to be paid in two more additional calls as may be decided by the Board/Committee of the Board of the Company from time to time.

Bharti Airtel Q3 Results Review:

Airtel has reported a good set of numbers for the topline. The bottom-line has missed the estimates by the large margins. The topline flourished because of the India business where the revenue increased by 5.1%. Also, the African business revenue increased by 6%. However, the number of customers declined for the company in December. Airtel had around 5.6 lakh lesser customers mainly because of the impact of the tariff hikes by the company. However, the company continues to garner a strong share of the 4G customers in the market. Hughes and Airtel form joint venture, becomes largest Satellite service operator in India

Airtel’s share price closed flat on Tuesday afternoon at Rs 706.95 per share.