Updated: Q409 Results: Bharti Airtel Reports Q4 Net Profit

Of Rs. 2239 Crores; ARPU, Minutes Of Use Down; M-

Banking

By MediaNama on April 29th, 2009  | Comments Off

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Bharti Airtel has reported a 4% rise in net profit at Rs. 2239 crores for the quarter ending 31st
march 2009 and Rs. 8470 crores for the year, which is a 26% year on year rise. Consolidated
revenues grew by 2% to Rs. 9825 crores in the quarter and to Rs. 36,962 crores for the year.
They’ve announced at dividend of 20%, and a share split of 1:2.

During the quarter, Airtel’s mobile subscriber base

grew from 85,651,000 subscribers to 93,923,000, up 10% quarter on quarter, and a 52% growth
year on year from 61,985,000 at the end of last fiscal.

With this increase in traffic, Airtel’s ARPU has dropped from Rs 324 last quarter to Rs 305 and
its average Minutes of Use has fallen by 20 minutes from last quarter.

The growth in Telemedia services (DTH, Broadband and IPTV) hasn’t still taken off, growing
just 4% to 2,226,000 at the end of March 2009, growing just 4% since the end of December.
Year on year, the company has recorded a 18% growth in Telemedia services revenues to Rs
33,517 million.

Consolidated EBITDA margins for the quarter continued to stand at 41% at Rs 40,014 crores like
previous quarters, but has decreased by 2% from last fiscal. The company said that it believes the
EBITDA margin is sustainable. Quarter on quarter growth of EBITDA has dropped to 1% from
7% reported in Q3.

Details: Release | Financials | Quaterly Report | Key Performance Indicators

M-Banking

Akhil Gupta, Deputy Group CEO and Managing Director of Bharti Enterprises has said that
Airtel is ready to exploit the M-Banking opportunity and welcomes the recent RBI‘s guidelines.
At the same time, Manoj Kohli, CEO and JMD for Bharti Airtel said that this is a capacity
building year in Mobile Banking for Airtel, and it will not have any significant impact on
revenues. At the same time, we should take note of the fact that M-Banking and M-
Entertainment have been identified by Airtel as separate heads, for specific focus.

Airtel Innovation Fund

The fund is not yet active and has not made any investments. The company said that it is
reviewing some applications and would be making an announcement soon.

Rural Subscribers Catching Up

Airtel’s mobile business has risen strongly to contribute to 68% of consolidated revenues,
posting revenues of Rs. 82,216 million for the quarter and Rs. 303,601 million for the year. This
is a 39% rise from FY08. Around 50-55% of subscribers added were from rural India in the
quarter. Airtel feels that they are best positioned for the rural market, since they have increaed
their retail outlets by 38% during the year. During the earnings conference call, the company also
said that the cost of retail outlets in rural areas is much lower than urban.

B and C class cities are fueling mobile growth for the operator. Its nearest competitor is 20
million subscribers behind, said Gupta. The company has grown its retail outlets at 28% and is
focusing on rural India. “Rural consumers are catching up quickly in usage,” Gupta said.
Marketshare and Churn

When asked about the operator’s fall in market share to 24% this quarter, officials said that
Airtel was only focused on revenue and that it has added to its revenue marketshare by 3.5%.
“We’re farther ahead of everyone else. Anytime we talk about numbers, should be seen in
conjunction with revenues. Each company if finding its own way of calculating and reporting
numbers,” Gupta said. Airtel is still facing high churn rates of 3.2% amongst its prepaid
customers, who form 94% of its base. At the same time the company claims to have added better
quality of customers to the network.

Minutes of Use Decline

The average minutes of use per user has been dropping from a high of 534 minutes in Q1 to 485
recorded this quarter. A 4% drop in usage this quarter has been due to the fact that there are two
days less in this quarter as compared to last. Gupta said the company’s non voice revenues have
grown faster than voice revenues.

Customer satisfaction
Despite being called the most congested network by telecom regulator TRAI, Airtel is boasting
of a healthy customer satisfaction score, saying the intention to purchase and brand salience have
grown very well.

Value Added Services

More details in this chart

According to our calculations, VAS revenues for Airtel in the quarter remained rather flat at Rs.
7992 million, compared to Rs. 7909 million last quarter. However, a decline in SMS revenues
has been compensated by an increase in Non-SMS VAS revenues, which increased from Rs.
4496 million in the Q3 to Rs. 4813 million in Q4. At present, Non-SMS VAS, which includes
Ringback Tones, Mobile Radio, WAP etc contributes over 60% to the companys VAS revenues.
Our calculations here.

Telemedia
Telemedia services posted revenues of Rs. 8585 million, contributing to 7% of revenues. Atul
Bindal, President – Mobile Services said that the business has given a strong EBITDA
performance, with incremental EBITDA margin coming at 66%. “There was sustained growth by
broadband and data -  38% of our wireline subscriber base is broadband,” he said. Telemedia has
been consistently adding 0.1 million customers every quarter and its customer base is now 2.7
million. Its ARPU has dropped to Rs 1071 for the quarter from Rs 1098 in Q3.

Airtel Digital, its DTH business, is ramping up at a fast rate, adding around 5500 customers per
day.

Attrition

Airtel has 4% fewer employees this year than it did last quarter: the company says that this
decline in employee base is not because of the economy. Employee count is down due to attrition
and outsourcing, the company has explained, and there has  nor has consequently been lesser
recruitment. 

On 3G, Spectrum

Airtel received spectrum for 3 circles last quarter and has applications for 5 still pending. It is
looking at 3G too.

Enterprise

Airtel’s enterprise carriers business has posted a 57% rise in revenues over the previous fiscal at
Rs. 67,937 million and revenues from its corporate clients has also been steadily rising to Rs. 16,
945 million. Airtel claims to be the largest provider of VPN services.