Bharti Airtel, Idea Cellular numbers reflect net reality as voice revenue drops

Via The Financial Express | Apr 29, 2015

The January-March quarter earnings of the country s top two listed mobile operator
s Bharti Airtel and Idea Cellular
confirm telcos worst fear: That their voice rev
enue, which contributes almost 80 percent to their overall revenues, is under pr
essure due to the growing dominance of over-the-top (OTT) operators. The profita
bility and revenues of the operators are increasingly getting dependent on data
revenue, which is rising data revenue in the case of Bharti, for instance, regis
tered a growth of 70.4 percent on a yearly basis
but voice realisations are eith
er remaining static or declining. This does not augur well since the yield from
voice services is higher, which cannot be compensated by rising data revenue unl
ess the charges for the latter are not increased by some 6-10 times to protect c
urrent revenues. The reason is that while a one-minute voice call yields around
50 paise to the operators, a similar duration internet-based call (VoIP) yields
only around 4 paise under the current tariff structure. In a post-earning press
conference on Tuesday, Idea Cellular managing director and CEO Himanshu Kapania
underlined the need for having a same service, same rule, which telcos have been
articulating for some time and have also stated in their responses to the consu
ltation paper floated by the Telecom Regulatory Authority of India on whether th
ere is need to regulate OTT players.
By one service, one rule, the operators mean that the tariff structure for voice
calls and VoIP should be similar. We are not asking for licensing any applicatio
n or OTT player. We just want same rules to be applicable for same services. The
government should decide what rules and services are applicable in this case, Ka
pania said on the issue of VoIP services. While Idea Cellular s net profit rose 22
.8 percent to Rs 942 crore sequentially, beating estimates, Bharti Airtel s net mi
ssed forecasts with a 12.7 percent decline to Rs 1,255 crore. Total revenues of
Idea during the period rose 5.1 percent to Rs 8,422.5 crore sequentially. In the
case of Bharti it stood at Rs 23,016 crore, down 0.87 percent compared with the
preceding quarter. Bharti s Ebitda margin stood at 35 percent against 33.54 in th
e preceding quarter. Consolidated Ebitda was above forecast at Rs 8,051 crore ag
ainst Rs 7,785.7 crore during the December quarter. The company s Africa revenue s
tood at Rs 6,215.3 crore versus Rs 6,627.6 crore during the preceding quarter. T
he average revenue per user (Arpu) during the quarter declined to Rs 198 against
Rs 202 in the previous quarter in FY15. In the case of Idea, Ebitda rose 11.3 p
ercent sequentially to Rs 3,064.5 crore and margins stood at 36.4 percent. Arpu
was flat at Rs 179.
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