India’s second largest telecom operator Bharti Airtel reported a mixed performance in the second quarter, with its net profit growth missing analyst estimates. But that was balanced out by its revenue growth and record customer additions. The street will also take note of Airtel’s growth in average revenue per user, or ARPU, which was higher than rival Jio Platforms.
Airtel, which announced the results on Thursday after market hours, said its consolidated net profit grew by 32.7 percent year-on-year to Rs 9,015 crore in the quarter ending September 30. Analysts attributed the underperformance to higher operating costs.
The company, which has operations in India and Africa, saw its revenues climb by 16.7 percent to Rs 60,878 crore. Its customer base in India grew by 10.9 percent to 498 million in the quarter.
“Our postpaid momentum remained strong with record high net customers additions of 1.2 million,” Executive Vice Chairman Gopal Vittal said in a statement. “We added 2.9 million smartphone data customers with continued improvement of our industry leading ARPU at Rs 271.The Homes business saw 676 K customer additions, driven by disciplined customer acquisition and continued progress on our convergence strategy,” he added.
The company’s growth in ARPU beat industry estimates. While Airtel’s ARPU grew 2.7 percent sequentially, Jio’s rose by 1.5 percent to Rs 218.8.
Jio’s consolidated net profits had grown by 13.7 percent year-on-year to Rs 8,387 crore in the second quarter. Its revenue was up 11.4 percent at Rs 40,475 crore. This was the company’s first quarter after its record listing.
Jio had dislodged Airtel as the country’s second most valuable company with a market cap of over Rs 13 lakh crore, on its listing day.
But going forward, analysts and investors will keep a close watch on Jio’s ARPU growth and if it can bridge the gap with Airtel. It also matters that Airtel is seen as a better cash-generating company.
Talking about Airtel’s future growth engines, Vittal said, “Our new growth engines continue to gain momentum. Our investment in a strategic land parcel during the quarter marks another important step towards realising our ambition of building 1 GW of data centre capacity. In Financial Services, early traction following the commercial launch has been very encouraging, with our digital platforms, advanced data analytics and disciplined operating model providing a strong foundation to scale the business.”
It would be interesting to watch how the company’s stock opens on Friday morning. On Thursday, investors were cautious ahead of its results with Airtel’s stock closing down 0.52 percent at Rs 2,056.90. That is despite the Sensex surging to its biggest single day high in seven months, and closed at 79,310, up 2,008 points.
