Bharti Airtel Posts Handsome Net Profit Of Rs 610 crore For Q3FY14

Bharti Airtel has come out with better set of numbers for the recently concluded Q3FY14. On consolidated basis the topline of the company has shown a growth of 13.34% on YoY and 2.9% on QoQ basis for Q3FY14 to stand at Rs 21960.70 crore. The bottomline on the other hand grew by 19.18% on sequential basis to stand at Rs 610 crore. The growth in the topline can be attributed to the healthy performance that the company has shown in the mobile services business both in the Indian and African business. Both the markets have grown by 8.84% (+2.56% QoQ) and 17.19% (+2.90% QoQ) on YoY basis to stand at Rs 11644 crore and Rs 7229 crore respectively. 

Growth in both these geographies was led by a combination of continued expansion in user base as well as slight improvement in Average Revenue Per User (ARPU). 

Bharti reported 2.6% sequential increase in its Indian user base whereas its African subscriber base expanded sequentially by 2.9% in Q3FY14. In addition, the company reported over 1.5% increment on a sequential basis, each, in India and Africa ARPUs to Rs 195 (versus Rs 192 in Q2FY14) and USD 5.8 (compared with USD 5.7 a quarter earlier), respectively. 

The good show on the data part continued in this quarter too. The data usage grew by 8% on QoQ basis increase in total Data Users to 54.43 Mn. The ARPU on the data front has risen to Rs 75 per user despite a slight reduction in data realization per MB to 30.14p, during the quarter, compared with 30.26p in Q2FY14. The company's 3G user base expanded even faster by 18% to 9.49 Mn in Q3FY14 on a sequential basis.

On the EBIDTA front, the company's margins expanded by 250 basis points on YoY basis (29 basis points QoQ) to stand at 32.30%. The expansion is mainly driven by lower employee cost and lower license & spectrum charges. 
What is noteworthy is that the free cash flow position of the company continues to remain strong and stands at Rs 4,271.5 crore at present. The company has also reduce its net debt to Rs 57,643 crore in the present quarter taking its debt to EBITDA ratio to 2.06x Q3FY14 as against 2.20x for Q2FY14.

The outlook of the company on its African business continues to remain bullish, this is mainly due to the signs of growth that it has seen in Nigeria (largest African Market).

With recent fund raising through Euro Bonds and healthy operating cash flows, Bharti's liquidity position remains strong. Consequently, the company is likely to remain an active and strategic bidder in 900 MHz band. We expect the company to bag the superior spectrum in all the three metros, where it is offered. Furthermore, reduction in Spectrum Usage Charges is anticipated to be positive for the company in long run.

The results have been on the better side and renewed investors interest in the counter cannot be ruled out going forward.