Telecom giant Bharti Airtel’s net profit for the third quarter of 2016 (October – December) dropped by 55 percent, a company statement revealed on Tuesday (24th Jan 2017). The company posted a net profit of Rs 504 crore for Q3 2016 period compared to Rs 1,108 crore posted during Q3 2015. Airtel’s total revenue also declined by 3 percent. In the third quarter of 2016, the operator posted a total revenue of Rs 23,336 crore compared to Rs 24,066 crore posted during the same period last year.
“The quarter has seen turbulence due to the continued predatory pricing by a new operator. The present termination costs at 14 paise which are well below cost have resulted in a tsunami of minutes terminating into our network. This has led to an unprecedented year-on-year revenue decline for the industry, pressure on margins and a serious impact on the financial health of the sector,” said Gopal Vittal, MD and CEO, India & South Asia.
Airtel’s mobile data revenues were at Rs 4,049 crore in Q3 and data volumes grew at 36.4 percent year-on-year. “Slowdown in mobile revenue growth primarily due to free voice and data offering by a new operator,” the statement said. “In India, other businesses have witnessed healthy growth, for example, 17.7 percent in Digital TV, 12.5 percent in Airtel Business and 10.8 percent in Homes on a year-on-year basis,” the statement further added.
The telecom giant also revealed that because of the spectrum acquired worth Rs 14,281 crore during October 2016 spectrum auction, the company’s consolidated net debt has increased to $14,339 million from $12,232 million in the previous quarter. The net debt excluding the deferred payment liabilities to the Department of Telecommunications (DoT) and finance lease obligations is now at $7,650 million.
Airtel and other telecom players are really facing the heat with Reliance Jio coming in with free services and disruptive pricing. Jio has witnessed explosive growth during the initial period and will most certainly continue to do so till the free services are there. What this price war mean for the consumer is lower prices across all carriers to compete with Jio, which is a good thing for the end consumer like you and me.