The ongoing price war has taken its toll on Bharti Airtel's and Idea Cellular's revenue earnings in Q3. The country's largest wireless player Bharti Airtel has reported 2% increase in net profit for the third quarter ended December 31, 2009. During the period, its total revenue growth was 1%.
Net profit grew from Rs 2,159 cr to Rs 2,210 cr, while net income grew from Rs 9,633 cr to Rs 9,772 cr.
According to analysts, the price war has affected many players. Earnings in the current fiscal for many players including Bharti Airtel and Idea Cellular will not be encouraging.
Idea Cellular's consolidated net profit dropped 22.5% to Rs 170 cr during the quarter ended December 31, 2009, as against Rs 219 cr in the third quarter of the last financial year.
“New players who did not exist a year ago are taking a bite of the market,” Idea Cellular MD Sanjeev Aga said at a press conference. “In addition to the stress of lower rates, Idea launched operations in seven new circles during the last nine months, which resulted in operational losses,” he added.
Aircel Cellular COO Gurdeep Singh recently said it is difficult to offer per second billing options to customers on a regular basis.
The consolidated total revenues of Bharti Airtel for the nine months ended December 31, 2009 of Rs 29,559 cr grew by 9% and EBITDA of Rs 12,205 cr grew by 9% on a year on year basis. The company continued to leverage its scale and strategic partnerships to secure cost efficiencies, leading to an improvement in EBITDA margins, to 41.3% from 41.1% in the corresponding period of the previous year. The net profit for the nine months ended December 31, 2009 was Rs.7,048 cr, a growth of 13% over last year. Free cash flow of Rs 4,446 cr resulted in the reduction of net debt to Rs 1,931 cr, with the net debt to equity ratio, reaching an all-time low of 0.05.
The consolidated total revenues for the quarter ended December 31, 2009 of Rs 9,772 cr grew by 1%, while EBITDA at Rs 3,911 cr declined by 1% on a year on year basis. EBITDA margins at 40% continues to be robust, reflecting scale economies and the efficient cost structure. net profit grew by 2% during the quarter, to Rs 2,210 cr and free cash flow was significantly higher at Rs 1,829 cr.
Bharti has 125 mn customers, as on December 31, 2009, across India and Sri Lanka, an increase in the total customer base of 42% over the corresponding period last year.
Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel, said "Bharti Airtel continues to ensure a robust market share despite the hyper competition and maintains its drive for internal efficiencies by leveraging its scale economics. In addition, we have enlarged our contiguous footprint in South Asia by entering Bangladesh market through a controlling interest in Warid Bangladesh."
It is time for leading operators to identify new business models to regain revenue potential. Competition will also escalate when the country goes for MNP implementation and 3G roll outs.
baburajank@cybermedia.co.in
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