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Airtel Q4-FY12 Concall: Double Digit Growth In Data; 1M MNP Port-Ins; Regulatory Disturbances

We were reporting the Bharti Airtel concall live. Read about the results here. From the concall:

2:33pm: (Akhil Gupta) We had suffered a loss of growth in traffic in the previous quarter, because we were correcting tariffs and maybe had become uncompetitive in some markets, which has now been addressed. In Africa, a pretty good quarter, and it’s on a growth trajectory. The interest & amortization, because of 3G and 4G impacts profit.

2:36pm: In Africa, Rwanda was launched as the 20th country, in a record 83 days.

2:38pm: Huge competitive intensity and several regulatory challenges. The customers in India and South Asia are just under 200 million, and we do around 2.5 billion minutes per day. Africa has seen structural correction – managed serivces, CAPEX model, the outsourced IT. We have a customer base of 53 million, and adding 2 million a quarter there. Overall the year gone by has been an extremely important year in our history. We have made massive investments in the future, particularly in 3G, TD-LTE and M-commerce. India and Africa are on the verge of a data revolution. On the flip side, this was the most disturbed year in terms of regulatory developments, and unprecedented uncertainty. We’re entering this new year as a fundamentally strong company, but the ability to make large investments in networks in India would depend on the outcome of the recent discussions and recommendations. We’re hopeful that the government will take pro-customer, pro-industry decisions.

2:44 pm: (Sanjay Kapoor) The competitive intensity has not come down. It’s an intensely competitive marketplace. The fact that we had upped the prices over the last few quarters gave us the intensity to win back our minutes. Competition were are bottom, and to expect any gain on prices would not be in order. What you see today should be the reality till a final consolidation happens.

2:45 pm: (Manoj Kohli) Africa tariffs have been stable, but in few competitive markets, there has been slight reduction, like in Ghana where there is a new competitor. No competitor is trying to initiate a price war, including us.

2:47 pm: (Sanjay Kapoor) Till consolidation happens, it may not be possible to inch up prices. From Q4 end last year to this year, the rates have gone up 1.3%, as compared to a big decline before that. Price hike seems utopian at the moment.

We haven’t heard the final word on refarming. The industry hasn’t minced words saying that it doesn’t make sense. We’re hopeful that this is not just a Bharti Airtel fight but an industry fight.

2:50 pm: We had one impact on data, TRAI had restricted the number of SMS which a customer could send to 200. Overall, between 2G and 3G data, we’re happy with the growth, there is double digit growth in data, with more and more smart phones coming into the system.

3:01 pm: What is leading to growth in VAS in Africa? “We are optimistic in non-voice in Africa because the median age is 18, and this usage of music, airtel money will increase with time. As the new VAS platforms are being launched, especially music, 3G is launched systematically (5 more markets this quarter, 7 countries in total), Airtel Money was launched in 3 more markets.

3:03 pm: Will you launch voice on LTE-TDD in India? There are no voice standards on LTE-TDD, and until these are defined we cannot launch.

3:04 pm: How has the response to 4G been? Early days, but the experience has been good.

3:06 pm: We have written down revenue recognition for S-Tel and Etisalat, because they have left the market

(Manoj Kohli): The costs structure in the last six quarters in Africa has been lumpy, and we were shocked by the cost structure in Africa. We think the lumpiness will stabilise in the next few quarters.

3:07 pm: 2G is growing, and there is need for investments in capex for 2G. Also the topography of the country is changing and more people are living in towns. We need to create more backhaul.

3:10 pm: Happy with our marketshare in India, however we have lost a little bit of ground, and we’ll keep trying.

3:20 pm: no comments on Sri Lanka and Bangladesh break-even

3:21 pm: There is an approximately $2 billion in debt due around June which will be repaid.

Have added 1 million net numbers ported into Airtel, which is the highest an operator has done in any quarter. We added substantially higher customers, and so there is a cost associated with it.

On churn: there is no standard definition of how a company defines churn, so you cant company with company. We are confident that our churn in control.

License fee reduction – as an when the universal license fee of 8% is notified, there might be a reduction in license fees.

3:25 pm: (Akhil Gupta) In India we are seeing the early signs of data becoming big. We are well prepared for this, and are prepared to make more. Africa is kicking off well, and there is steady progress on the rvenue side, and constantly gaining marketshare. Incremental margins are becoming better. We can expect a better margin going forward. The big question is on India. I think if the regulatory environment is stable, sensible and pro customer and pro industry, this could be a phenomenal year for Indian telecom.

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