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Falling Re drags Bharti Airtel quarterly profit down 9.6%

Telecom major Bharti Airtel on Wednesday reported a 9.6 per cent drop in consolidated net profit to Rs 688.9 crore in the first quarter ended 30 June, mainly due to depreciation in the rupee and higher taxes. The company posted a profit of Rs 762.2 crore during the same period a year ago.
'Derivative and exchange fluctuation losses during the quarter were Rs 534 crore, mainly caused by the rupee depreciation,' Airtel said
in a statement. 'Consolidated tax charges at Rs 968 crore have increased from Rs 454 crore last year, mainly increasing in Africa.' The telecom company said an increase in pricing power due to reduced competition helped to contain the profit decline.

Airtel cut back on discounts offered to customers after some operators halted services on failing to win spectrum. 'For the first time we have really some good element of pricing power, diminishing of waste and leakages coming back into the market place,' Bharti's Group chief financial officer Sarvjit Singh Dhillon said.

'Bharti Airtel's adjusted revenue as well as EBITDA came better than expectations, while the bottomline was below our expectations due to higher taxes,' Angel Broking's research analyst Ankita Somani said. 'Bharti continues to be our preferred pick amongst telcos due to its low-cost integrated model.'

The company's total income increased 9.3 per cent to Rs 20,299.5 crore in the quarter from Rs 18,570.3 crore a year earlier. Airtel's India revenue grew 12 per cent to Rs 14,123.3 crore from Rs 12,657.3 crore in the same quarter a year ago.

'DTH had a strong quarter with 34 per cent year-on-year growth. Turning to mobile, last quarter we were talking about efforts to improve our realisation coming on the back of reduction of discounted minutes,' Airtel's joint managing director and CEO Gopal Vittal said.

Airtel reported consolidated results of it international operations for the first time, including its Africa, Sri Lanka and Bangladesh business. The consolidated overseas revenue grew 5 per cent to Rs 6,322.2 crore during Q1 from Rs 6,044 crore a year ago. The company's net debt at the end of the quarter stood at Rs 58,380.6 crore ($9,779 million).

'We are now number 1 in as many as 10 African countries, number 2 in five and number 3 in two African markets,' said Bharti Airtel CEO (International) and Joint MD Manoj Kohli.

Globally, Airtel's customer base increased 5.4 per cent to 27.4 crore, dominated by mobile users, compared with 26 crore a year earlier. Its total mobile subscribers in India stood at over 19 crore at the end of June.

The company's Q1 mobile services revenue in India grew 11 per cent to Rs 11,601.3 crore from Rs 10,463.5 crore. Airtel said voice rates in India increased to 36.39 paise from 35.68 paise last year, while usage per customer rose to 455 minutes from 433 minutes.
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