Airtel profit up fivefold, revenue misses estimates

Net profit at India's second-largest telecom operator stood at ₹11,022 crore against ₹2,072 crore a year earlier, as it added a deferred tax benefit of ₹5,913 crore. However, compared to the December quarter when it gained from the Indus Towers consolidation, profit was 25.4% lower.

Consolidated Q4 revenue of ₹47,876 crore was up 27.3% on-year and 6.1% on-quarter, driven by higher India business, revenue growth in Africa and the full impact of Indus Towers consolidation. The India mobile services business, which contributes 56% to overall revenues, saw revenue growth of 20.6% on-year to ₹26,617 crore, driven by higher tariffs, smartphone user additions and premiumization efforts, the company said.

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Airtel Business, which houses services to enterprises and contributes 11% to total revenue, fell 2.7% YoY to ₹5,315 crore. Overall, the revenue figures missed estimates of ₹49,200 crore, according to average estimates of five brokerage firms.

“Airtel Business revenue moderation was in line with our strategy outlined last quarter to shed our low-margin wholesale business while underlying growth continues to remain steady," vice chairman and managing director Gopal Vittal said, adding Airtel ended FY25 “on a strong note".

Last quarter, the company had announced plans to exit the low-margin wholesale commodity voice and messaging business.

Airtel's India average revenue per user (Arpu) was flat at ₹245 in the March quarter. In comparison, India’s No. 1 carrier Reliance Jio’s Arpu rose to ₹206.2 from ₹203.3 in the December quarter. Vodafone Idea is yet to release its quarterly figures.

Airtel’s revenue miss and flat Arpu assume significance as rival Reliance Jio intensifies efforts to capture market share. At the same time, investors are closely watching the entry of satellite broadband players like Starlink, whose presence could significantly alter the competitive landscape of the telecom sector in the coming years.

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Crisil Ratings in a note said that the industry Arpu is expected to rise by ₹20-25 to reach ₹225-230 by the end of this fiscal, assuming tariffs remain stable. “Around 55-60% of the incremental Arpu is expected to come from rural subscribers," said Anand Kulkarni, director at Crisil Ratings. According to Kulkarni, relatively lower Internet penetration in rural regions will drive migration of subscribers to data plans.

During the March quarter, Bharti Airtel also incurred an exceptional loss of ₹140.1 crore to settle a legal dispute over the group’s erstwhile subsidiary in Africa.

Airtel's India business revenue at ₹36,735 crore was up 28.8% on-year and 6% on-quarter. Revenue was impacted by portfolio transformation, in line with its stated strategic goal to eliminate low-margin business, Airtel said. Last quarter, it had announced plans to exit the low-margin wholesale commodity voice and messaging business.

“India revenue increased by 6%. Africa continued its underlying performance even as there was steadiness on currency. India mobile business grew by 1.3% sequentially, despite having two less days in the quarter. Growth was driven by premiumization. We added 6.6 million smartphone users and maintained an industry-leading ARPU of ₹245," Vittal said.

Vittal added that the company’s balance sheet is solid, supported by strong cash generation, disciplined capital spending and ongoing debt reduction. The company prepaid ₹5,985 crore of high-cost spectrum dues in March, totalling prepayment of over ₹42,000 crore in the last two years.

While earnings before interest, tax, depreciation and amortization (Ebitda) rose 39.9%% to ₹27,404 crore in the fourth quarter, Ebitda margin rose by 240 basis points to 57.2% from 54.8% a year earlier.

Net debt rose to ₹2.04 trillion in the quarter from ₹1.94 trillion a year ago. The telco incurred a capex of ₹14,401 crore during the quarter.

Airtel recently proposed to convert some government dues into equity like its smaller rival Vodafone Idea Ltd. Investors are expected to track the company's view on the matter at its analysts' call on Wednesday, along with developments on the termination of merger talks with Tata Play for direct-to-home (DTH) business, spectrum takeover from Adani group, and guidance on further tariff hikes.

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The telecom operator added 0.6 million postpaid users in March quarter, taking its overall user base to 25.8 million.

In the March quarter, Airtel added 18.2 million customers in the country, taking its total base to 424.5 million customers at the end of March. Of the total users, the company’s India mobile user base was at 361.6 million, up from 356.6 million in the preceding quarter and 352.2 million in the year-ago period. 

Mobile data consumption in India surged 21.2% to 21 billion GB, with average monthly usage reaching 25.1 GB per customer. In comparison, Reliance Jio’s total data traffic rose 19.6% YoY to 48.9 billion GB. Further, Jio’s average data consumption per user per month on the company’s network was at 33.6 GB.

Homes business, which includes home wi-fi, broadband and TV connectivity, saw revenue rising by 21.3% on-year to ₹1,596 crore, while its fixed wireless access service saw addition of 812,000 customers to reach a total base of 10 million.

“We expanded our home-pass network at an accelerated pace with over 2.0 Mn home passes in the quarter," Airtel said.

Airtel declared its results after market hours. Earlier, shares of the company closed 2.7% down at ₹1820.95 on BSE.