Jio effect: Bharti Airtel Q4 net profit crashes by 72%

Pankaj Doval Pankaj Doval

New Delhi





Pain For Telecom Industry To Increase, Say Analysts 

 

Bharti Airtel, the country's top telecom operator, on Tuesday reported a 72% decline in fourth quarter net profit as an intense tariff war takes its toll, following the aggressive entry of Reliance Jio. Jio's free voice and unlimited data offerings, which had continued till the end of March after being rolled out in September last year, had a catastrophic impact on the business and financials of Airtel as it IndiGo Q4 net dips 25% on fuel cost, P 21 witnessed a contraction in earnings from both voice and data segments. Airtel's net profit in January-March 2016-17 stood at Rs 373 crore against Rs 1,319 crore in same quarter of 2015-16.This was the second straight quarter of a steep decline in the company's net profit after 55% fall in October-December quarter. Airtel continued to accuse Jio of engaging in “predatory pricing“ and blame it for “dete riorating health“ of the telecom industry .

“The sustained predatory pricing by the new operator has led to a decline in revenue growth for the second quarter in a row. The telecom industry as a whole also witnessed a revenue decline for the first time ever on a full-year basis,“ Gopal Vittal, MD and CEO of Airtel's India & South Asia operations, said.
Vittal said the company was forced to make “significant investments“ to cope with the “tsunami of incoming voice traffic from the new operator“. Jio's aggressive entry has impacted business of telecom players badly . While Airtel is bleeding, equally-bruised Vodafone and Idea have decided to merge operations to strike economies of scale and face competition with more strength.

Airtel's average revenue per user (ARPU) -a barometer to gauge health of a telecom company -was down to Rs 158 at the end of the fourth quarter compared to Rs 196 realised at end of the first quarter (AprilJune) of 2016-17.