Friday , May 25 2018

Jio Effect: Airtel Q3 Net Plunges 54%, Shares Fall

Airtel’s combined revenues fell 3 percent to Rs. 23,364 crore compared to Rs. 24,103 crore as it was enforced to respond with price cuts to Jio’s unlimited free voice and data services under a trial plan.

Airtel

Airtel, India’s largest telecom operator stated 54 percent drop in its December quarter profit to Rs. 504 crore, its lowest in 4 years, as competition from new competitor Reliance Jio hit its revenues.  Airtel had posted a net profit of Rs. 1,108 crore for the corresponding period a year ago. A fierce price war has exploded in India’s mobile phone market since the entry of Reliance Jio Infocomm, owned by the Mukesh Ambani, which has offered both free data and voice calls to grab customers.

Airtel’s combined revenues fell 3 percent to Rs. 23,364 crore compared to Rs. 24,103 crore as it was enforced to respond with price cuts to Jio’s unlimited free voice and data services under a trial plan.

Airtel’s net profit was 50 percent below predictors’ profit guesses, which averaged Rs. 1,087 crore, according to Thomson Reuter’s data.

“The quarter has seen misperception due to the continued greedy pricing by a new operator,” Gopal Vittal, Bharti’s managing director and chief executive for India and South Asia, stated in a statement.

“This has led to an unparalleled year-on-year revenue decline for the industry, pressure on margins and a serious influence on the financial health of the sector.”

Average revenue per user for Airtel’s voice services in India fell nearly 7 percent from the July-September period to Rs. 123, while its average revenue per user from data declined 13 percent to Rs. 175.

Airtel also reported losses from its Africa operations of Rs. 620 crore, up from Rs. 487 crore in the same period previous year, hit by the devaluing of Nigerian currency, the company said.

As of 11.34 am, Airtel shares traded 1.6 per cent lower at Rs. 311.45. The stock fell as much as 3.6 per cent to Rs. 305 during intraday trade. In comparison the broader Nifty50 index was trading 0.54 per cent higher at 8,521.

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