Bharti Airtel – Record Q3 + Poor Broadband Growth in 2008

Bharti Airtel has announced its Q3 FY09 results. Revenues continued to rise knocking off all the worries of slowdown.

We are more interested in the performance of Bharti Airtel Broadband division. Without any doubt, Airtel Broadband growth has been POOR in 2008. At the beginning of 2008, Bharti Airtel broadband had 7.51 lakh customers and the company ended the year with 9.92 lakh customers mere 32% growth in the number of broadband subscribers. However, during the same period, All India broadband subscriber growth has been 74.12% taking the total number of broadband subscribers in India to 5.45 mn.

Peek into Q3 FY09 Results:

  • Airtel recorded revenues of Rs 96 bn [up 36% YoY] with a Net Income of Rs 21 bn [up 25% YoY]. As an investor, one should look at the RoE coming down from 37.1% Q2 last year to 34% and RoCE fairly stable at 32.4%. Does this imply a slowdown ahead ? The Management acknowledged its definitely a challenge to maintain at 30% (+) levels but is all determined to do so.
  • Mobile services continued to get bulk of the revenues. ARPU at Rs 324 and MoU / Month / Customer at 505. 93% of customers are in pre-paid segment with 1.1% voluntary churn rate.
  • Value Added Services – SMS, Hello Tunes, Music on Demand and Airtel Live contributed to approximately 9.5% of the total revenues of the segment. SMS alone accounted for 4.1% of the total revenue of the segment.
  • ARPU for Broadband / Telemedia Dvision down to Rs 1,098
  • 50% of the investments are in Wireless Business while Passive Infrastructure Services is getting a whopping 24% investments indicating significant expansion. Telemdia which includes broadband gets mere 11% of the investments.
  • DTH available in 62 cities and more than 100,000 customers being added by Airtel Digital TV every month since its launch last quarter.
  • Sri Lankan Wireless operations overhwhealming. USD 200 mn earmarkd for investments in SriLanka. No further details were available as it has been just 2 weeks since its launch.

Stay tuned we have complete update on how Bharti Airtel views competiton from Reliance Mobile GSM and the new tariff war in Indian Wireless space.