Record quarter for Bharti Airtel – $2bn Revenue + 80 million customers

India’s largest Telecommunications company Bharti Airtel achieved a new milestone by recording Rs 9,000 crore revenue in Q2FY2009 [@ Rs 45 / $] and also added the highest number of customers in any single quarter since its inception, 8.2 mn taking the total tally to 80 mn [79.89 mn].  Telecom India has neatly stacked up subscriber base of each Telco in India.

Insight into Bharti’s results,

• As an investor one should notice that the Net Profit Margin has probably hit the peak last quarter. In 2005, Bharti had a NP Margin of 18.7% and due to operational efficiencies it was constantly rising until June-08 to hit 23.9% and decline to 22.7% at the end of Sept-2008. This could be due to increased CAPEX in DTH TV, all this means, there is increased competition ahead 🙂
• Bulk of Bharti Airtel’s customer come from Mobile services – 77.47 mn. ARPU has slipped to Rs 335 from Rs 350 without any increase in Minutes of Usage. Pre-paid churn declined to 3.2% from 3.8% a quarter ago, this should decrease as we near the era of Mobile number portability. Airtel Mobile has 24.6% market share of Wireless services in India. Airtel has 60,000 towers and is sharing some of them with Indus [Vodafone  + Idea cellular]
• Bharti Telemedia [ Wireline + Broadband] saw 5% QoQ increase in customer base to 2.5 mn. ARPU has marginally increased to Rs 1,147 from Rs 1,138. Airtel Broadband subscribers reached 920,000. Unfortuntaely, Bharti is not too aggressive in expanding its broadband network. Going forward, bandwidth prices will decline but most customers will stay in the same pricing plan and will demand more bandwidth. Earlier Rs 999 / 900 would BUY 256 Kbps unlimited data transfer pipe with some free calls and today its is 384 Kbps. Some impatient A$$ like me will opt for the 1 Mbps pipe 😉
• National Long distance usage grew by 10% while International Long distance minutes used saw a growth of 12% compard to previous quarter.
• Has Bharti silently started downsizing ? Employee count down 2% QoQ to 25,616.

Lets wait for the management guidance and its plans for the rough road ahead of us. Going by Bharti’s results, I expect Reliance Communications results to be terrible as they sail into the GSM CAPEX boat now and 3G later.

Update – Highlights of Conference Call:

• To a question on employee downsizing, Manoj Kohli said that consolidation of operations has led to better productivity and utilization – Customers / Employee and Revenues / Employee. Airtel is also moving towards Unified Billing to a customer who subscribes to various services.
• Atul Bindal refused to divulge the details of DTH CAPEX however from the next quarter DTH revenues will be reported separately
• Higher Network Operations Cost as Airtel expands into interiors of India where there is no Power and the company has to run on Generator sets
• Airtel is not worried about excess GSM capcity by new operators as Airtel was not a manufacturing company and belived in providing unmtached quality of service. The company is facing some spectrum shortage in Metro Circles, however, it is continuously striving to deploy new technologies to keep the customer happy. [From personal experience in Karnataka circle, Airtel does provide unmatched customer care and enhancing the same]
• Infratel IPO will not happen until 2010 and Airtel will transfer ~35,000 towers to Indus. It is open for passive infrastructure sharing with Telnor or Datacom.