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Airtel Results: Non-Voice Is 14.6% Of Mobile Revenue In Q1-FY12; Telemedia Still Floundering

Airtel’s non voice revenues (data, VAS, SMS) in India have declined to 14.6% of total revenues for the quarter, of the peak of 15% that was reported last year, despite a 3.64% growth in total mobile revenues, to Rs 9840.4 crore. MediaNama readers should keep in mind that in June, the company had issued new guidelines for subscription services, which would probably have impacted new sign-ups, if implemented. New guidelines are also being enforced by the Telecom Regulator TRAI, necessitating consumer confirmation of subscription by SMS, email or FAX; the impact of this regulation expected to be enforced this month, may be also impact revenues from non-voice in future.

Financials

Airtel reported consolidated total revenues of Rs 16,974.9 crore, up from Rs 16,293 crore last quarter, and a net profit of Rs 1215.2 crore, down from Rs 1400.7 crore last quarter. It reported an EBITDA of Rs 5705.8 crore, up from Rs 5483 crore. It’s EBITDA margin was flat, marginally down to 33.6%, from 33.7%. In a statement, Airtel said that income before taxes dropped mainly on account of: higher interest outgo (Rs 344 crore) caused by the Africa acquisition and 3G investments in India, and 3G license fee amortization (Rs 159 crore).

India & South Asia

– Airtel reported a substantive 9.53% increase in mobile traffic, but this hasn’t really been reflected in revenue, which grew 3.81%, which is par-for-course. There was a marginal decline in rate per minute, but that has now been addressed (in the current on-going), with a reported increase in rates from the company.

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– The company claims a customer marketshare of 19.8%, and a revenue marketshare of over 30%.

– There was a 28% decline in net additions, with only 6.98 million connections added, compared with 9.7 million the previous quarter.

– ARPU declined to Rs 190, but that is still above the market average.

– Monthly churn declined to 6.4% from 7.6%.

– Telemedia revenue increased 3.13% to Rs 945 crore, up from Rs 917 crore last quarter. Last quarter, telemedia was flat.

– Digital TV: Airtel’s DTH business showed a substantive 10.64% growth, reporting a subscriber base of 6.26 crore.

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– Based on our calculations, Airtel added only 11,240 broadband subscribers during the quarter, which is rather poor. This is not surprising, given its practice of providing a degraded consumer experience by reducing speed of access with an increase in broadband usage, by instituting a ‘Fair Usage Policy’. As we mentioned last quarter, it appears to us as if Airtel is content with its broadband base, and is looking to improve monetization, at the cost of growing its base. IPTV also doesn’t appear to be a significant area of focus. Frankly, we don’t understand why Airtel is still in the wireline business: for a company this size, it is unable to get substantial growth in broadband based for either lack of focus, poor strategy and/or investment in growing the base. If Airtel is just hanging on for an unbundling of the last mile, it could be a very long wait. On the flip side, it doesn’t cost the company much to stick around.

Organizational Changes

In a statement, Sunil Bharti Mittal, Chairman & MD of Bharti Airtel Ltd, has said that “In India, the Company’s efforts in the area of cost efficiencies have helped arrest the margin decline. The new customer facing organization in India will see more agile and responsive teams in action. This will also give a fillip to growth in value added services, broadband, digital TV and airtel money. Overall, 2011-12 promises to be an exciting year of transformation”.

Airtel restructured its India and South Asia operations into Business to Customer (B2C) and Business to Business (B2B) segments, with the B2C segment catering to retail customers, homes and small offices, and will combine operations of all its previous units including Mobile, Telemedia, Digital TV, and other emerging businesses (like M-commerce, M-health, M-advertising). It will consist of Consumer Business (customer experience, product and service innovation, data, VAS, new products/services), and Market Operations (access business, taking products and services to customers). More details here.

South Asia

According to Airtel’s quarterly report, the company says it has 4 million connections in Bangladesh. This is despite Airtel announcing 5 million connections in Bangladesh recently

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Last quarter: Report | Conference Call

Note: we’ll update Africa data separately

Airtel updates from the quarter:
– Airtel May Be Looking To Acquire Zimbabwean Telco NetOne
– Bharti Airtel Restructures India & South Asia Operations
– Airtel Bangladesh Touches 5 Million Customers; Plans Service Expansion
– Intra Circle 3G Deal Between Idea, Airtel, Vodafone
– Airtel Had Estimated Cost Of LBS Rollout At Rs 4500 Crore For 100 Mtr Accuracy
– Airtel Issues New Guidelines For Billing For Subscription Services
– Airtel Movies Launches, BigFlix Eyes Subscription Biz; Does Airtel Have Bandwidth?
– Update: Airtel Money Launched In Delhi-NCR; 1665 Txns In April 2011
Bharti Airtel Launches Radio Mirchi On Fixed Line; Direct Feed?
– Updated: Airtel Money Launches In Chennai; Delhi Next

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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