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Airtel Q311: Rs. 340 Cr On Rebranding; India ARPU At Rs. 198, MoU Down, Churn Up

Airtel has reported consolidated revenues of Rs. 15756 crore for the quarter ended December 31st 2010, up 52.9% year on year, largely on the back of the addition of its Africa revenues, as the company reported an EBITDA margin of 33.8%. Its India and South Asia revenue grew 13.7% year on year, and reported an EBITDA margin of 37.3%. Net Income for Bharti Airtel was Rs. 1303 crore (down sequentially from Rs. 2195 crore the previous quarter), with India and South Asia reported net income of Rs. 1828 crore, again down from Rs. 2195 crore the previous quarter.

Airtel has almost 200 million mobile customers at present – around 152 million of them in India, 42 million in Africa, and almost five million in Bangladesh and Sri Lanka. In India, it has 3.3 million Telemedia and 4.9 million Digital TV customers.

Download: Press Release | Quarterly Report | KPI

Rebranding Costs

Over the last few months, Airtel went through a rebranding exercise, not just rebranding Zain Africa as Airtel, but also launching a new logo and theme across its markets. All in all, Airtel spent Rs. 340 crore on rebranding, across India, South Asia and Africa.

India & South Asia

Airtel doesn’t disclose specific revenue information for India, but its revenue from the South Asia Region (India, Bangladesh, Sri Lanka) grew 3.88% quarter on quarter, and 13.7% year on year (albeit with the addition of revenues from Warid Bangladesh). In the recent months, Airtel announced key initiatives in the mobile banking and commerce space – it announced a joint venture with India’s largest bank State Bank of India, for operating as a banking correspondent, to provide banking services. Additionally, just a couple of days ago, it launched Airtel Money prepaid cash card services.

Most importantly, though, it launched 3G services in Karnataka, and followed that up with launches in Chennai and Coimbatore. It’s not the first private telco to launch 3G, but it isn’t very late either. However, there has been criticism of how high Airtel has priced 3G services.

However, probably the most important development (not reflected in these results), was the launch of mobile number portability. As you can see from the charts above, there has been a dramatic increase in churn for Airtel – with monthly churn for the quarter at 7.8%. Additionally, there was a marginal decline in the number of minutes of use per user. Average rate per minute during the quarter was 44.2 paisa.

Worth noting: there was a fairly significant increase in Airtel’s non-voice mobile revenues, perhaps due to the festive season, or perhaps due to an increase in revenue from value added services. Non voice revenue, which includes Voice Mail Service, Call Management, Airtel Talkies and other value added services like Hello Tunes, Music on Demand and Airtel Live contributed to approximately 13.8% of the total revenues of the segment.

During the quarter, Bharti‟s share of net additions was 14.2% of all India wireless subscriber net additions.

Telemedia Services

– Operating in 87 cities.
– Added 41,055 customers on its Telemedia networks with 3.3 mn customers as on December 31, 2010.
– The company had approximately 1.40 mn customers (43.1%) of the total customer base subscribing to broadband (DSL) services.
– The ARPU for the quarter was Rs 934 per month.

– Revenues from Telemedia operations of Rs 906.8 crore, up 6.1% over the previous quarter last year.
– EBITDA for the quarter was Rs 404.5  crore compared to Rs 393.3 crore in the corresponding quarter the previous year
– The EBITDA margin for this segment was 44.6%

Enterprise Services

– Revenues of Rs 1050.3 crore, a decline of -4.9% over the corresponding quarter last year.
– Enterprise services revenue contributed to 9% of the total revenues of South East Asia.
– The EBITDA during the quarter ended December 31, 2010 was Rs 226 crore, a decline of 31.0% over the corresponding quarter last year.
– The EBITDA margin for the quarter was 21.5%.

Airtel In Africa

Airtel reported 4053 million in revenues from Africa for the quarter, up 4.17% sequentially. The company’s subscriber / connection base increased 5.09% during the quarter to 42.12 million, but even as Average revenue per minute declined 8%, its minutes of use went up by 17%. Monthly churn for Airtel also increased.

During the quarter ended December 31, 2010, the company incurred a capital expenditure of $ 306 million on its African Operation.

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