Bharti Airtel Ltd’s June quarter results will bring relief to investors, especially after the shocking results of Vodafone Idea Ltd. Revenue at Airtel’s mainstay India wireless business grew for the second consecutive quarter. They are up 2.2% from the March quarter, on the back of a 4.3% sequential expansion in the March quarter
In comparison, revenues at Vodafone Idea had fallen 4.3% and resulted in a 22% drop in operating profit on a like-to-like basis. In Airtel’s case, operating profit or Ebitda dropped only by 1.8%. Ebitda stands for earnings before interest, tax, depreciation and amortization.
Drill down further and it becomes clear why Airtel has handled the onslaught of Reliance Jio Infocomm Ltd much better. To start with, the fall in its subscriber base is far lower than Vodafone Ideas.
Importantly, the expansion in mobile broadband towers is better at Airtel, where they rose 2.6% to 177,141 towers. Vodafone Idea saw a mere rise of 1.1% to 157,278 towers.
Note that Vodafone Idea’s revenue is ahead of Airtel’s, even while it's broadband coverage is lower. It isn’t surprising then that Airtel’s total data customer base grew 4.3% last quarter, while Vodafone Idea’s data users fell 2%.
Data usage per customer has seen notable improvement— up 8% vis-à-vis 4.9% in March quarter. As a consequence, the improvement in realization, also known as average revenue per user, is also better at Airtel.
Now that Airtel has reported a steady performance for its India wireless business, it is evident that Vodafone Idea’s underperformance can be explained by company-specific issues. The mega-merger and the time taken to integrate teams and networks have weighed on the latter’s performance.
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