Bharti Airtel Q2 results declared

India revenues for Q2’21 at Rs 18,747 crore increased by 22.0% YoY. Mobile revenues grew by 26.0%. This is an outcome of the company’s unrelenting focus on winning with quality customers on the back of a solid network, aspirational brand and delivery of a differentiated experience. Resultantly, ARPU for the quarter is at Rs 162 as compared to Rs 128 in Q2’20.

The company continues to garner a strong share of the 4G net ads in the market. 4G data customers increased by 48.1% to 152.7 Mn compared to the previous year while traffic increased to 77.3 PB/day vs 48.9 PB/day in the corresponding quarter last year. Engagement parameters continue to be best in industry – average data usage per data sub at 16.0 GBs/month; while voice usage was at 1,005 mins/sub/month. We continue to make progress on improving customer experience. We were awarded the ‘Best Network Experience’ for Gaming, Video, download speed and voice by Open Signal in their Sep’20 report. We continue to leverage the power of one Airtel to serve the evolving consumer behaviour – bank, secure payments and One Airtel propositions. After slowdown in site deployment due to COVID, we accelerated roll-outs in Q2 and added 5K+ sites to cross the 200,000 site count mark. We continue to remain focused on optimally augmenting our coverage and capacities to offer a differentiated network experience.

Homes business segment witnessed a revenue growth of 7.3% YoY. We added over ~129K customers during the quarter to reach to a total base of 2.58 Mn. We re-calibrated our offering and launched Xstream bundles with content and unlimited internet to accelerate penetration. The company signed on many more LCO partnerships in non-wired cities, extending the model to 48 cities. The company also focused on fast-track network expansion by rolling out Fibre Home Passes and upgrading existing copper network during the quarter.

Airtel Business continues to accelerate its momentum with 7.5% YoY growth, driven by data demand across global business and enterprise & government business. To further leverage growth from “Work from Home”, various products were launched. Airtel BlueJeans, Airtel Secure, Airtel Cloud and Airtel IQ were launched to meet the specific needs of our B2B customers. In the Government segment, we are seeing gradual recovery and change in focus towards IT modernization and investments in security & cloud. In addition, there is a big drive on Energy Management Systems, robust connectivity platforms to enable Government connect with citizens and focus on smart cities. We are well positioned to serve this demand. Overall, the company remains fully geared and focused towards becoming a solution provider of repute and go beyond connectivity and drive solutions such as cloud, security, data centres and CPaaS solutions.

Digital TV witnessed a growth of 1.9% YoY on an underlying2 basis, on the back of strong customer additions of 549K during the quarter. We continued to expand our channel portfolio and are also working with educational institutions to broadcast classes to students to ensure education is not disrupted.

Airtel’s journey as a digital services provider of strength continues to improve. We now have 160 Mn digitally engaged users. On Wynk – we are now #1 in terms of MAUs (59.3 Mn in Q2’21) with an addition of ~9 Mn during the quarter; Thanks platform has 81.6 Mn MAUs in Q2, with an addition of ~8 Mn and Airtel Xstream is at 33.7 Mn MAUs, addition of ~8 Mn users during the quarter.

There are over 1.1 million retailers transacting and making payments every day on Mitra App. Online recharges continue to contribute ~50% of overall revenues. As part of our strategy to build new revenue streams from best-in-class digital services, the company has forayed into the fast-growing Indian cloud communications market with the launch of Airtel IQ, an omni-channel Cloud based communications platform. Developed by Airtel’s digital team, Airtel IQ helps businesses deepen customer engagement by orchestrating seamless and secure communication across voice, SMS, IVR in their applications through a unified platform.

Further in line with our partnership model and to augment our Cloud service offerings, we entered into a partnership with AWS Professional Services to develop differentiated Airtel Cloud products and capabilities leveraging AWS services, Airtel’s data center capabilities and Airtel’s network and telecoms offerings.

We also launched Airtel Secure, a suite of cyber security solutions for large, medium and small businesses as they shift to digital and cloud platforms, increasing the need to protect data and information from online attacks. We have partnered with firms like Cisco, VMware, Radware and Forcepoint to jointly provide cyber security solutions to both enterprises and government.

Consolidated EBITDA witnessed an increase of 32.6% YoY to Rs 11,848 crore in Q2’21. This led to an improvement in EBITDA margin from 42.3% in Q2’20 to 46.0% in Q2’21. Incremental EBITDA margins across businesses remained healthy, with mobile services EBITDA improving from 36.3% in Q2’20 to 42.6% in Q2’21.

Consolidated EBIT increased by 121.4% YoY to Rs 4,412 crore. The Consolidated Net Loss before exceptional items for the quarter stands at Rs 744 crore. The Consolidated Net Loss after exceptional items for the quarter stands at Rs 763 crore.

The Net Debt-EBITDA ratio (annualized) and including the impact of leases as on September 30, 2020 is at 2.91 times as compared to 3.30 times as on September 30, 2019. Excluding pending AGR dues, the Net Debt-EBITDA ratio (annualized) is at 2.41 times as on September 30, 2020.

Supreme Court ruling on AGR matter: Pursuant to the judgment of the Hon’ble Supreme Court of India on October 24, 2019 (‘Court Judgment’) including subsequent supplementary judgments, and in the absence of any potential reliefs, the Group provided for Rs. 368,322 Mn for the periods upto March 31, 2020 on the basis of demands received and the period for which demands have not been received having regard to assessments carried out in earlier years and the guidelines / clarifications in respect of License Fees and Spectrum Usage Charges (‘AGR Provision’).

On July 20, 2020, the Hon’ble Supreme Court, after hearing all parties, observed that the amounts of AGR dues given by DoT in their modification application is to be treated as final (‘DoT Demand’) and there can be no scope of re-assessment or recalculation. Consequently, without prejudice and on prudence, during the quarter ended June 30, 2020 the Group had further recorded an incremental provision of Rs. 107,444 Mn (including net interest on total provision created considering interest rate as per the affidavit filed by DoT on March 16, 2020 with effect from the date of Court Judgment) to give effect of the differential amount between the AGR Provision and the DoT Demand along with provision for subsequent periods for which demands have not been received computed on the basis of the License Agreement read with the guidelines / clarifications and the Court Judgment, which had been presented as exceptional item. During the quarter ended September 30, 2020, the Company has continued to recognize its AGR obligations based on Court Judgment and guidelines/clarifications received from DoT in respect of License Fees and Spectrum Usage Charges.

Further, in its judgment dated, September 1, 2020 the Hon’ble Supreme Court reaffirmed that the demand raised by the DoT stated in its modification application as final and no dispute or re-assessment shall be undertaken. In addition, Hon’ble Supreme Court directed that the Telecom Operators shall make a payment of 10% of the total dues as demanded by DoT, by March 31, 2021 and remaining dues in yearly instalments commencing April 1, 2021 till March 31, 2031, payable by March 31 of every succeeding financial year. The Group has represented to DoT that it has already paid more than 10% of the total dues as demanded by DoT and will ensure ongoing compliance with the Hon’ble Supreme Court’s orders.

In a statement, Gopal Vittal, MD and CEO, India & South Asia, said:

“Despite being a seasonally weak quarter, we delivered a strong performance with revenue growing at ~22% YoY. In the mobile segment, we added over ~14 Mn 4G customers and grew revenues by ~26%. Our focus on building the most aspirational brand in Indian Telecom to win quality customers is delivering results. Our data consumption grew by 58% YoY which reflects strong engagement of customers on our network. This further underscores our DNA of customer obsession and delivering brilliant experiences through a future ready network and innovative digital platforms. Other lines of business also continued with steady growth momentum, with Airtel business growing 7.5% YoY.

We stay committed to improving the profitability of the business. Our continued focus on ARPU improvement and cost optimization led to EBITDA margin expansion by over ~ 158 bps in the quarter sequentially”.

COVID-19

With the series of unlocks throughout the country, we see a gradual return to normalcy. However, while the economy opens up, the COVID pandemic continues. Delivering uninterrupted services and great end user experience while ensuring safety of our employees and partners continues to remain our key priority. We continue to drive awareness about digital channels for online recharges and payments, as well as redressal of customer complaints.

Network: Connectivity has become even more essential across all realms of life – work, education or entertainment. We accelerated the pace of our infrastructure deployment to support growing customer needs. Our network teams continue to ensure urgent response for service restoration where impacted, while simultaneously improving the overall network experience of customers through digital tools and analytics.

Governance: We continue to closely track all developments through a 24*7 war room with rigorous cadence of leadership meetings chaired by the CEO to monitor safety of our employees and partners, review network and customer experience along with business performance.

Safety and society: Our utmost priority remains safety of our employees and partnerships. We have provided all sanitation essentials to our workforce on the field and stepped up hygiene measures across all our offices. All our retail stores are maintaining social distancing norms, restricting number of customers inside the store at any time. We reopened our offices across the country with voluntary attendance ensuring strict adherence to local regulations. We have also ensured comprehensive insurance coverage for our employees, and extended financial support to our partners wherever critical for medical expenses. We tied up with various hospitals across India, appointed a national health advisor, and empanelled a network of doctors to ensure immediate medical consultation, not only for our employees but for their families as well.
CT Bureau