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Airtel's Q1 profits fall 73.5% following Telenor acquisition


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Airtel's Q1 profits fall 73.5% following Telenor acquisition

Bharti Airtel Ltd.'s managing director and CEO for India and South Asia, Gopal Vittal, was optimistic about the telco’s recently completed acquisition of Telenor ASA's India unit, despite the company reporting a steep decline in net profits and the ongoing pricing war in the Indian telecoms sector.

The Indian telecom giant saw its first-quarter net income drop by 73.5% to 970 million Indian rupees in the three months ended June 30, from 3.67 billion rupees during the same period last year.

Bharti Airtel closed the Telenor India acquisition after receiving the regulatory go-ahead and statutory approvals required in May. The deal involved the integration of Telenor’s India operations in seven regions across the country, including Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East), Uttar Pradesh (West) and Assam.

"The [Telenor India] integration has been a very solid exercise, with our teams working seamlessly to migrate customers onto Airtel’s network," Vittal said during a July 27 earnings call.

The acquisition added 28 million new customers, bringing the company's total customer base to 457 million in 16 countries, and contributed about 1.50 billion rupees to the group’s total revenues, Vittal added.

Meanwhile, Vittal said that the company's Indian mobile infrastructure company Bharti Infratel Ltd.’s merger with Indus Towers, which will create a US$14.6 billion telecom infrastructure giant, is "on track" as it recently received approval from various Indian stock exchanges, Vittal said.

Bharti Airtel reported an 8.6% year-over-year fall in consolidated total revenue for the first quarter of 200.8 billion rupees.

The Sunil Mittal-led Indian telco’s Africa unit, which is planning to list to reportedly pay off some of its 950 million rupees in debt, saw its revenues grow during the first quarter by 13.9% year over year, to US$794 million.

Vittal said that despite the industry’s ongoing pricing war in India, largely triggered by price fighter Reliance Jio Infocomm Ltd., he was convinced prices will rise in the next six months as the industry moves to a "three-player market," following the near-completed merger of Vodafone Group PLC's India unit and Idea Cellular Ltd.

"India is a market of 1.3 billion customers. With three large [telco] players that are growing larger, there is an incredible amount of allowance given to the customer so prices will have to correct," Vittal concluded.

As of July 26, US$1 is equivalent to 68.70 Indian rupees.