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  Business   Companies  10 May 2017  Price war effects Airtels quarterly profit

Price war effects Airtels quarterly profit

Published : May 10, 2017, 9:48 am IST
Updated : May 10, 2017, 9:48 am IST

India's largest mobile telecoms network operator, reported smallest quarterly profit in more than four years.

Representational Image
 Representational Image

Mumbai: Bharti Airtel, India's largest mobile telecoms network operator, reported its smallest quarterly profit in more than four years on Tuesday, as free services offered by upstart rival Jio sparked a price war which has eroded sales and margins.

The results highlight the turmoil in the world's second-biggest cellphone market following the entry late last year of Reliance Industries' new network operator Jio, which has forced Bharti and others to slash rates to retain customers.

Bharti Airtel said its net profit plunged nearly 72 percent from a year earlier to 3.73 billion rupees ($57.7 million) in the three months ended March 31, its fiscal fourth quarter, missing analysts' forecasts of 5.28 billion rupees.

It was the company's smallest quarterly profit since the December quarter of 2012, according to Thomson Reuters data. Revenue from operations fell 12 percent to 219.35 billion rupees.

"The sustained predatory pricing by the new operator has led to a decline in revenue growth for the second quarter in a row," Bharti Airtel Chief Executive Gopal Vittal said in a statement. Jio began charging for its services in April, but analysts say low tariffs will continue to pressure industry revenues.

Bharti Airtel's average revenue per user for mobile services in India fell 8 percent from the previous quarter to 158 rupees.

Bharti Airtel, which operates in 17 countries across Asia and Africa, said its revenue from African operations rose 2.6 percent on the same period last year at constant currencies.

Jio's onslaught has triggered consolidation in India's ultra-competitive telecoms sector. Vodafone Group Plc's Indian subsidiary and Idea Cellular have agreed a $23 billion merger that will create the market's biggest carrier, overtaking Bharti Airtel. Meanwhile Bharti has taken over Norwegian Telenor's operations in six states.

Tags: airtel, reliance jio, telecom operators