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Updated: Bharti Airtel ARPU Down To Rs. 220; VAS Revenue Grows “In The Right Direction”

Updated below

At Rs. 10,056 crores, Bharti Airtel‘s revenues for the quarter ending 31st March 2010 crossed the Rs. 10,000 crores for a quarter mark for the first time. This number includes revenues for both mobile, telemedia (broadband, IPTV, DTH) and Enterprise services.

Mobile Segment Results
Mobile Revenues for Airtel for the quarter were at Rs. 8,197.5 crores, down marginally year on year from Rs. 8,221.6 crores during the corresponding quarter last year. EBITDA for the segment was Rs. 2,396.9 crores from Rs. 2,586 crores for the quarter ended March 2009, down 7%. EBITDA margins for the mobile segment were 29.2 percent.

Airtel company clocked its highest ever traffic on its network, up by 19.6 billion minutes, (13 percent up quarter on quarter). Average minutes of use per user recovered, and grew to 468, from 446 the last quarter.

Pre-paid churn for Airtel declined to 5.9% for the company, down from 6.5% the quarter before. EBITDA for the quarter was Rs. 3,920 crores, declining 2 percent year on year from. EBITDA margins remained robust at 39 percent, while net income declined by 8 percent during the quarter, to Rs. 2055 crore. Airtel had 127.62 million GSM subscribers at the end of Q4, up from 118.86 million at the end of the previous quarter. Only 4.2 percent of them post-paid.

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Details: Release | Financials | Quarterly Report | KPIs

Some notes from their results and subsequent media conference that we attended:

On 3G Auctions in India

“What’s obvious is that whoever wins going to have to pay a lot of money The current rate of bidding is aggressive, for sure,” Akhil Gupta, Deputy Group CEO and MD of Bharti Enterprises and a Director of Bharti Airtel Limited said, adding that “It’s a no brainer that when the costs go up, the pricing goes up as well.”

Market Scenario

The company is still facing a market with declining tariffs, and its average rate per minute declined to Rs. 0.47, from Rs. 0.52 in the last quarter. However, Average Revenue Per User (ARPU) for the company was at Rs. 220, down Rs. 10 from Rs. 230 last quarter. ARPU is the performance indicator that reveals how much a telco earns per subscriber per month. Airtel prefers to focus on minutes utilization.

“The temporary phase of unsustainable and irrational competitive behavior is over. In the last quarter, the trend of declining overall revenues was reversed, growing over 3 percent quarter on quarter,” Gupta said.

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Bharti Airtel CEO Sanjay Kapoor said that “The tariff war (in India) has proved over the last few quarters that the customer is not naive. We did not match the least common denominator in the marketplace, but network usage has grown.” He does not favor regulatory intervention in pricing, saying that “In a 14 player scenario, the market mechanism determines price, and things will move towards an equilibrium.”

Africa & Bangladesh

Gupta believes that the impending Zain acquisition in Africa will be completed soon. He said there will be new and immense challenges in the coming year, but they intend to make inroads in Bangladesh and Africa. “These will test all our experience and learnings of the last 15 years to the hilt,” he said. Kapoor added that the network capacity contracts for Bangladesh already finalized, and with just around 30 percent teledensity the there is opportunity for growth in that market.

Bharti Airtel will be revamping outsourcing contracts that Zain has struck once the acquisition is complete. On the complexity of dealing with multiple telecom regulators. Gupta said that “It doesn’t become more complex just because of there being 15 regulators to deal with: it’s not a big challenge. But allow us to go into Africa first and then we’ll be better informed. On whether Airtel would be looking at further expansion into Africa, he said that they’re in 15 of 53 countries in Africa, and “Let us first chew on what we have, before looking at anything else.”

On Sri Lanka Operations

Airtel will be rolling out services in the eastern part of Sri Lanka next month, and the northern part next quarter.

On VAS Revenues

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Sanjay Kapoor said that the revival in Airtel’s revenues has been led by mobile services almost completely. “VAS revenues are moving in the right direction, which is reducing our dependence on voice.” He added that the company gets 10 percent of revenue in Sri Lanka through VAS, “which is more than our competitors in the same marketplace.”

The percentage of “Non Voice Revenue” for the company grew 9.3 percent quarter on quarter to 11.8 percent of mobile revenues. SMS revenues as a percentage of mobile revenues declined to 5.7 percent of total mobile revenues.

Update: Airtel execs during the conference call said that ‘Rural Value Added Services’ like mandi rates, which they’ve launched in collaboration with IFFCO, have taken off. “This is a trend we see continuing in the future,” he added.

On Telemedia

Airtel’s Telemedia segment, which includes Broadband, DTH and IPTV, reported revenues of Rs. 851 crores for the quarter, down 1 percent from Rs. 858.5 crores during the corresponding quarter last year. A decline in telemedia revenues is rather unusual. However, for the full year, the segment reported revenues of Rs. 3415.4 crores, up 2 percent from Rs. 3351.7 crores during the corresponding quarter last year. EBITDA margins in the Telemedia segment were robust at 43.5 percent.

The Telemedia customer base grew to 3 million, 3 percent up from 2.989 million customers at the end of the previous quarter. Telemedia ARPU was declined 3 percent to Rs. 937, from Rs. 964 during the previous quarter.Telemedia ARPU has declined 13 percent year on year, though its customerbase has grown 12 percent.

Airtel CEO Sanjay Kapoor said that the DSL (Broadband) penetration for the company is at 42 percent of its Telemedia customer base, with 1.3 million customers. “Outsourcing model has been extended to Telemedia, and it’s a lean and mean operation now. The industry added 12 million customers int he last 5 years, and 10 million in the last year. ” On IPTV, Kapoor said that it will always be a boutique strategy, as opposed to wireless DTH.

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There are 16 million DTH households in this country, and we’re number one in terms of gross DTH additions. We’re leaders in 12 of 19 clusters, and crossed 2.5 million DTH customers during March.”

Airtel Innovation Fund

Bharti Enterprises Group CFO, responding to MediaNama’s question on the status of investments from Airtel’s Innovation Fund, said that no investments have been made yet.


Bharti Airtel ARPU Down To Rs.230, SMS Rev Up, Net Profits Down, IPO For Tower Unit

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