Bharti Airtel has reported revenues of Rs. 152,150 million, up 47% year on year, and a consolidated EBITDA margin of 33.7%. This is the first quarter when Airtel has reported Africa results, at revenues of Rs. 38910 million for the quarter. Airtel Africa reported an EBITDA of Rs. 9311 million, with EBITDA / Total revenues at 23.9%.

On a consolidated basis, the mobile services segment for India and South Asia reported total revenues of Rs. 88045 million, up 6% from Rs. 82902 million. EBITDA declined 7% to Rs. 30964 million. EBITDA margins in India and South Asia has been maintained at 37.3%. India and South Asia revenue grew 9.2% year on year, as compared with a 8.2% yoy revenue growth in the previous quarter.

Mobile (India)

– Airtel has 143.292 million mobile connections in India.
– Traffic of 196,196 million minutes, up 1% quarter on quarter and 36% year on year
– Pre-paid customers are 96.1% of subscriber base
– Monthly churn is up to 5.9% from 5.8%
– Average Revenue per User was Rs. 202, down 6% quarter on quarter. Sanjay Kapoor said that ARPU for the company is bound to go down with rural growth, and especially the way rates have gone down. 3G and BWA might help keep ARPUs up.
– Average Revenue Per Minute Rs. 0.444, down 1% quarter on quarter from Rs. 0.448. Sanjay Kapoor said that the realized rate fell by 0.4 paisa, which is the lowest fall in the last seven quarters, and that the company “held rates” instead of participating in a price war.
– Average Minutes of Use per user were 454 minutes, down 6% from 480 the previous quarter. Kapoor attributed this decline to the second quarter being the slowest, due to seasonality. Kapoor said that minutes of use for Airtel are higher than for the industry, and have been holding up well, but were down this quarter on account of seasonalityplan.
– Access and interconnection charges are 10.9% of total revenues
– License fee is 10.2% of total revenues

Mobile Wallet
Kapoor didn’t disclose any plans, saying only that “all options are being evaluated, and “there are many options to use the semi closed payment system.” He declined to comment on a date for the rollout

Non Voice revenues (India)
The contribution of Non-Voice revenues (SMS, VAS, Mobile Internet) to Airtel revenues is up to 12.7% from 11.6% of revenues the previous quarter. Sanjay Kapoor said that the growth in non voice revenue over has been contributed largely by Mobile Internet, and also from Ringtones and SMS. Airtel tied up with Nokia for Talk To Me interactive services with SMEs. He added that all indications are that growth in non-voice will be on account of Internet usage. “Customers from B, C, D category town are coming online, and we’ve extended the edge network. We’re expecting 3G to address the pent up demand.”

3G
Airtel will launch 3G before the the end of this calendar year, Kapoor said, adding that “Hopefully, you should see a pan India presence. As far as prices and tariffs are present. The very fact that a new entrant in 3G (Tata Docomo) has entered at prices higher than incumbent prices, should indicate how leveraged the market is. H doesn’t think there will be a tariff was in 3G, under rational circumstances, but, “”Irrationality can never be explained”. He didn’t deny that they’re in discussions with quality operators who have got 3G spectrum. There have been reports of Idea and Vodafone in talks with Airtel for a partnership around 3G.

Mobile Number Portability
“I dont believe that any company that looks at customers services due to a trigger of an event (MNP) will make good of that. Customer service goes on irrespective of MNP. India is a prepaid market, with churn of 7% per month. The company makes every effort to ensure that every effort of customer. We see MNP as an opportunity, and we’re sticking to a migration plan.

Africa

Manoj Kohli said that Bharti has managed to arrest declining trends of revenue and subscribers in the African market, and the new additions have gone up by 57%. Africa has low mobile penetration of 20-25%, healthy tariff, and low competition: Zain was already number 2 in the market, but was not investing in the business.
– In the last 4-5 months, Zain has integrated operations with Bharti, and has established its teams.
– Modified tariffs in 10 markets out of 16. There were significant premiums in seven markets, which were unsustainable.
– “There are early results of positive elasticity in Africa,” Kohli said, adding that the minutes of use have grown by 13%.
– Price war? “There’s no intention of any price war,” Kohli said. “We want competitive tariffs. We’ve to retain the pricing power in Africa.”
– Network: working with Ericsson, NSN and Huawei on networks
– Tied up with IBM for IT. 65 platforms will be commissioned.
– There is no BPO sector in Africa. Airtel has inducted IBM, Tech Mahindra and Spanco, and all three are keen on establishing the sector.
– Will be going towards villages and towns, deeper than FMCG, with electronic recharge
– Brand launch will be in the next few weeks
– Have 3G licenses in 9 markets out of 15. “Our data focus will be high, because there is no DSL in Africa. Median age is 17 in Africa, and we expect high data usage,” Kohli said. Airtel will issue a 3G contract, as a global contract, with partners for services across Africa, India and Bangladesh.
no guidance on profitability in Africa.We’ll make some fundamental improvements to make the foundations healthy.you will see positive trends.
– Challenges: logistics are tougher than any other part of the world. There are higher costs, and we’re working on economies of scale
– Africa is an EBITDA and EBIT positive business, but there’s a tax impact,
– Debt pre-payment: Airtel will be prepaying some of the Zain acquisition debt, around $800-$900 million.
– 800 million capex guidance for Africa

More updates soon