Wednesday, February 8, 2012

Bharti Airtel Q3 FY 2011 - 2012 Result Analysis

Bharti Airtel, India's largest telecom service provider, grew its revenues by 7% to Rs 18,477 crore in Q3 of current fiscal over the September 2011 (Q2) quarter. Its earnings before interest, tax, depreciation and amortization grew 2.5% sequentially while net profit declined by 16.6% y-o-y and 1.5% q-o-q to Rs 1,011.3 crore. Bharti’s third quarter performance shows that while it has managed to grow revenues, maintaining profitability is increasingly becoming a challenge.

Bharti reported a higher than expected SG&A of Rs 3,465 crore compared to estimates of Rs 3,116.7 crore. The impact of this higher SG&A spend has hurt the bottom line by Rs 235 crore. The company’s EBITDA margins too have contracted sequentially from 33.6% in Q2 to 32.2% in Q3.

Bharti’s ARPM rose to Rs 0.446 compared with Rs 0.436 a quarter earlier. Consequently, the company’s ARPU (average revenue per user) improved by Rs 4 sequentially to Rs 187 during the quarter.

The stock rallied after the Supreme Court cancelled all 122 2G licences issued after 2008 as the market expected the competitive intensity to come off, but not all analysts are of this opinion. Many believe that telecom is a price-sensitive business and the competitive intensity will continue to prevail.

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