Mumbai: Bharti Airtel Ltd. reported a record quarterly loss as it took a one-time charge of Rs 30,710 crore ($4.3 billion) to pay fees related to a court ruling, and as competition with Reliance Jio Infocomm Ltd. dragged down tariffs.
Net loss was Rs 23,040 crore for the three months ended September, the India’s third-largest wireless carrier said in a statement Thursday. That compares with the Rs 1,420 crore loss based on average analyst estimates. Revenue came in at Rs 21,130 crore.
Key Insights
- Bharti, once the top carrier in India by subscribers, dragged Singapore Telecommunications Ltd. also into its first quarterly loss. Singtel, as an investor in Bharti’s holding company, made a provision in its books for the unprofitable carrier and posted a net loss of S$668 million ($490.2 million).
- Sunil Mittal-helmed Bharti is selling assets and paying down debt while losing money on its operations and facing a Supreme Court ruling ordering it to pay about Rs 300 crore in overdue fees related to spectrum and licenses.
- India’s top court last month ordered the country’s carriers to pay a combined Rs 92,000 crore, dealing a blow to Bharti and Vodafone Idea Ltd., which were already struggling to keep subscribers and revenue amid a price war with upstart Reliance Jio. Wireless carriers have sought relief from the government, with rival Vodafone Idea Ltd.’s parent calling the situation ‘critical’.
- The latest numbers are a “humongous loss” for Bharti, said Sanjiv Bhasin, executive vice president at IIFL Securities Ltd. “The government should take sincere efforts to find solutions to the real problems of Indian telcos,” he said. “It needs to find a right balance between bailouts and levies.”
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- Bharti Airtel had 304 million subscribers in the quarter
- Read more earnings details here
- Earnings were announced after the close of trading hours but Bharti’s $750m 5.65% perpetual notes slumped the most since Oct. 24
- Vodafone Idea is also set to announce its earnings on Thursday. -Bloomberg
Also read: Vodafone Idea going bust will badly damage India’s attraction for investors
One half of the loss Vodafone has incurred. The entire telecom sector is, in effect, bankrupt. For that matter, Jio should not be celebrating either. The large sums, mainly borrowed, its parent, Reliance, has invested are providing a small trickle of profit. It has changed the rules of the game, making voice, the bedrock of telephony, worthless. How much data are Indian’s going to consume at a huge profit to the provider. The government should intervene, before chunks of the economy begin to tear off, like ice sheets shearing off and falling into the ocean.