New Delhi: The profitability of Bharti Airtel had fallen drastically in the December quarter, and the company reported huge losses after taking into account the finance costs.
Earnings before interest and tax (Ebit) of the division dropped 93% year-on-year to Rs 167 crore.
The losses suggest that the company is willing to take on Reliance Jio Infocomm ltd in the long term.
According to the Kotak Institutional Equities, “The key takeaway from the quarter’s earnings print is the increased willingness of incumbents to fight Reliance Jio hard in what is now a brutal fight for ‘LTE recharge’ market share; incumbents are gunning to regain some of their lost ‘LTE spend share’ and perhaps seeing some signs of success there. This is at the expense of ARPU (average revenue per user) dilution from a lot of existing customers, of course.”
The major chunk of the losses came from the cut in interconnection usage charge (IUC) by the Telecom Regulatory Authority of India (TRAI). This cut was effective from October 1st. It is said that the cut in IUC alone accounted for 70% of the loss in revenue.
Reliance Jio and Airtel both are using Long term evolution technology to offer the 4G services.
Airtel India wireless business revenues have dropped by 22.2% year-on-year and 12.2% sequentially to Rs10,751 crore.