Bharti Airtel has reported its fourth successive quarterly decline in profit as rising competition from Reliance Jio's aggressive tariffs hit the company hard. Airtel's net profit in the first quarter of 2017-18 crashed 75 per cent (year on year), the steepest fall in last one year, to £36.7 million against £ 146.2 million in the same period in 2016-17.
This brings with it a 72 per cent drop in net profit in the previous quarter (January-March 16-17) and signals tough times for older telecom operators after the entry of Jio in September last year with disruptive tariffs, including lifetime free voice offer. Airtel's net profit was down by 55 per cent in October-December of 2016-17 and 5 per cent in July-September. The company also recorded a 14 per cent fall in consolidated revenues in Q1, which stood at £2.19 billion against £2.55 billion in the first quarter of 2016-17. The worst factor is net realisation from voice and data has been declining sharply, while overall consumption is growing. Voice usage per customer grew by 22 per cent in Q1, but realisation slipped by 34 per cent. Average revenue per user has slipped in both key metrics.
Airtel called Jio's tariff plans “predatory” and blamed it for creating financial mess in the telecom sector. “The pricing disruption in the Indian telecom market- caused by the entry of a new operator, continued with industry revenues declining over 15 per cent year on year, creating further stress on sector profitability and cash flows,” said MD, Gopal Vittal. The company has been seeking relief from the government in view of growing pressure on profitability and revenues, and its demand is in line with other older operators such as Vodafone India, Idea Cellular, and Reliance Communications.
