Bharti Airtel’s Network Fluctuates With Its Q4 Earnings

Telecom major Bharti Airtel came out with its Q4FY13 earnings this morning. To the utter disappointment of the markets, the financials have gone haywire for the company as a whole. On a consolidated basis, the topline of the company witnessed a growth of a mere 9% for Q4FY13 on a YoY basis to stand at Rs 20,484 crore as against Rs 18,729 crore for Q4FY12.

The EBITDA stands at Rs 6487 crore for Q4FY13 which grew by a mere 4% on a YoY basis. The EBITDA margins have witnessed a decline of 160 basis points on a YoY basis to stand at 31.7% for Q4FY13. On the bottomline, there has been severe decline on a YoY basis, which went down by 49% for Q4FY13 to stand at Rs 508.6 crore as against Rs 1005.9 crore for Q4FY12 and the market expectations of around Rs 605 crore.

One of the reasons for such a decline in profit was a significant rise in the tax outgo. The tax expenses have grown significantly by 14% on a YoY basis for Q4FY13. The press release by the company said that during the quarter ended March 2013, the group has recognised additional tax charges of Rs 37.4 crore on account of dividend distribution tax relating to dividends received from Indus Towers for which no tax credit is available to the group, and Rs 95.9 crore on account of additional deferred tax charge due to the increase in surcharge from 5% to 10% as per the Finance Bill 2013. As a result, the income tax expense for the quarter is higher by Rs 133.3 crore and net income is lower by Rs 117.8 crore.

Now, let us take a look at the international front. The EBITDA margins for the African business declined by 24 basis points to 25.4% as of Q4FY13. However, the bottomline remained in red for the concluding quarter of FY13. The loss from the African operation has widened to Rs 4857 crore as against a loss of Rs 3406 crore for Q4FY12. 
However, there are some positives to the current result like the mobile internet which witnessed a strong growth of 71% in India, 24% in Digital TV, 17% in Airtel business (B2B) and 12.6% in Africa. With Mobile India mix having improved to 3.2% from 5.9% on a sequential basis for Q4FY13, the segment witnessed positive net additions after two quarters. The ARPU has grown to Rs 193, a sequential improvement of Rs 8 in this quarter, fuelled by an increased customer usage at 455 minutes, and rate stability. However, on the other hand, the ARPM declined slightly by 0.5% to 42.3paise/min. Vas as a percentage to revenue remained almost flat at 17.4%. The stock trades at a PE of 10.06x on its FY13 earnings.