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Page 1: Revenue Fall Not Drastic, but Profitability Impacted’...Reliance Jio, backed by India’s richest person Mukesh Amba-ni, started commercial opera-tions on September 5 with free voice

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“While the revenue fall is notdrastic due to launch of unli-mited low-price data and voiceplans in mid-March, profitabi-lity is clearly impacted,” saidPrashant Singhal, global tele-com leader at EY.

Bharti Airtel shares gained1.8% to .̀ 427.60 at close on theBSE on Tuesday, after tou-ching a 52-week high of .̀ 431earlier in the day. The resultswere announced after the mar-kets closed.

In Africa, the telco reporteda profit of $52 million compa-red with a loss of $78 million ayear ago, helped by growth indata customers and con-sumption.

India continued to be a worry.Reliance Jio, backed by India’srichest person Mukesh Amba-ni, started commercial opera-tions on September 5 with freevoice and data offers that con-tinued till March end. Altho-ugh Jio has started chargingfor its data services, prices arebelow market rates and voiceremains free on its network.The company said last week itplans to launch a 4G featurephone that will be offered ef-fectively free of cost.

“Their focus appears to bemore on customer market sha-re rather than revenue marketshare, which is a positive forBharti as it will be able to mo-netise its high-value custo-mers in metros and tier-I mar-kets as Jio’s focus will be pri-marily on tier-II and III citycustomers,” said Pankaj Agra-wal, partner at telecom andmedia consultancy Capitel.

Jio’s rivals were forced toslash effective data rates andoffer free voice calling on someplans across price segments,hurting key operational indi-cators such as average revenueper user (ARPU) and averagerevenue per minute (ARPM).

The price cuts helped widenAirtel’s India data user base,

but hurt revenue per user andwere a drag on the pace of reve-nue growth from mobile broad-band, expected to be the mains-tay as the voice business slows.Lower-priced and even free vo-ice offerings helped to increaseminutes on the network.

India ARPU for voice and da-ta combined fell 2% on quar-ter. Separately, voice and dataARPUs fell 2.5% and 4% onquarter, respectively, whilerealised rates for both servi-ces plunged 9.5% and 51.1%,with the drop in data ratessharper than in the January-March period.

The company’s data customerbase grew 9.1% on quarter, in-creasing data usage per user by96.2% on quarter. Data now ac-counts for 21.9% of the carrier’sIndia mobile revenue, compa-red with 21.5% in the previousquarter. Mobile data revenueaccounted for 17.1% of total re-venue compared with 18.2% ayear ago. Overall mobile datarevenue during the quarter fell18.8% on year.

Airtel said the percentage ofusers leaving the network roseto 3.8% from 3.6% in the Janu-ary-March period due to com-petitive pressures.

Quarterly net interest costrose to Rs 1,789 crore from Rs1,631 crore a year ago, mainlyon account of increased spec-trum-related interest costs,dragging net profit further. Fo-

rex and derivative loss narro-wed to Rs 39 crore from a loss ofRs 309 crore a year earlier.

Consolidated net debt total-led $13.6 billion comparedwith $14.09 billion in the pre-vious quarter and $12.37 bil-lion a year ago.

The margin of earnings befo-re interest, tax, depreciationand amortisation (EBITDA)contracted to 35.6% from36.4% in the previous quarter,hurt by the fall in revenueeven as expenses rose.

Bharti Airtel’s net profit of$52 million in Africa was onmarginal growth in revenue to$736 million, also helped bycurrency appreciation.

“Organic revenue growth forthe quarter was 1.5% Y-o-Y,though our efforts to optimiseunprofitable revenue streamsresulted in higher net revenuegrowth of 3.3%. New KYCnorms impacted customer ad-ditions and consequently re-venue growth in the quarter,”said Raghunath Mandava,MD, Africa.

He said data consumptionand revenue increased by 75%and 11.3%, respectively, on ye-ar. “Our focus to deliver a moreprofitable business model forAfrica has resulted in anotherquarter of EBITDA marginimprovement, with underly-ing margins expanding by8.1% on year from 19.9% to28.0%,” he added.

‘Revenue Fall Not Drastic,but Profitability Impacted’��From Page 1

Sebi has every right to ask a listed company to disclose to the

stock exchange its inability to service a loan. Typically, a bank

declares an account as a non-performing asset 90 days after the

default. That’s a long time in the financial market. Companies can be given a grace

period of, say, 30 days, after the default to make the disclosure to stock exchanges.

This will enhance transparency and, in turn, help investors take a call on the stock.

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A Matter of Right Also “making such disclosuresmandatory ensures asymmetryof information is avoided. It helpsmarket participants to correctlyprice bonds and bond derivativeson the company.”

The government and RBI havetaken a series of measures to re-solve banks’ bad debts, which areseen as a threat to India’s econo-mic health. Sebi, too, has takenseveral steps in this regard.

Sebi last week asked listedbanks to make disclosures if pro-visioning and NPAs assessed by

RBI exceeded 15% of publishedfinancials. Recently, Sebi askedcredit rating agencies to seek in-formation from companies onthe servicing of debt obligationsand disclose this immediately.

“Disclosures are always welco-me in a disclosure-based regi-me,” said Sudhir Bassi, executi-

ve director, capital markets,Khaitan & Co, a leading lawfirm. “However... due considera-tion should be given that anytemporary delay should not be areporting event. Hence, if a debtpayment is (delayed) for say twoor three months, then it shouldbe a disclosure requirement.”

Banks are saddled with over .̀12lakh crore of stressed loans. Thisincludes restructured debt, of

which NPAs account for morethan .̀ 7 lakh crore. Some expertsurged caution when making jud-gement calls on such informa-tion. “All demands for disclosuremust be tempered with the valuethat they may deliver and also bythe factor that wrong interpreta-tion can be made by not fully un-derstood disclosures,” said Shai-lesh Haribhakti, founder, BakerTilly DHC, an advisory firm.

Measures to Curb Banks’ Bad Debt��From Page 1

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