I would say in 2010 our decision to go to Africa was a bit rushed, and that has taken 6-7-8 years and a lot of resources and my personal time to fix,” Sunil Mittal, chairman of Bharti Airtel said at an event in Delhi in December 2017. Airtel entered the continent in 2010 with a $10.7 billion acquisition of Zain Telecom in 18 countries. But it finally looks like that the bet has paid off. Its Africa operations, which posted a net income of Rs 698.7 crore ($105.02 million) in the March 2018 quarter, appears to be the only piece which is holding up Airtel’s profitability as a whole.

India and South Asia operations recorded a loss of Rs 724.7 crore ($108.93 million) for the quarter, compared to a net profit of Rs 40.5 crore ($6.09 million) in the March quarter, last year.

For a shareholder, Airtel’s numbers are bad. And a company should be concerned, when, in an analyst call, almost everything that people want to know is about the other guy. How is Airtel going tackle the new entrant Reliance Jio? One question after another.

India’s largest telecom company (by the number of subscribers) narrowly avoided being in the red and posted a net profit of Rs 83 crore ($12.48 million) in the quarter. It faces an intense price war from Jio. The telco’s net profit declined by 77.8% year-on-year (YoY), but some analysts expected the company to post a loss as high as Rs 380 crore ($57.11 million).

Had the company posted a loss, it would have done so for the first time in 15 years. And had it not been for its performance in the Africa business, the company surely would have.

Consolidated revenue, which includes Airtel’s Africa operations, declined 5.4% to Rs 19,634 crore ($2.95 billion) as the moats the company built started eroding. India and South Asia revenues stood at Rs 14,796 crore ($2.22 billion and a decline of 7.5% YoY) while Africa region posted revenues of Rs 4,917.3 crore ($739 million and an increase of 10.7% YoY). Africa revenues account for 25.13% of Airtel’s consolidated revenues and the company attributed this to strong data growth and Airtel Money transactions.

A November 2017 report from investment banking company CLSA says that for the next three years, Africa revenues will grow by 3% CAGR (Compound Annual Growth Rate) led by lower access charges and tight cost controls. Africa’s balance sheet was helped by Airtel selling assets worth $3.25 billion over the past three years. Airtel sold 10,540 towers and sold its Burkina Faso and Sierra Leone operations. (Access charges is a fee paid by a subscriber to a carrier to get on their network.)

For the full year, Airtel posted a net profit of Rs 1,099 crore ($165.2 million), a sharp drop of 77.1% YoY.

AUTHOR

Shashidhar KJ

Shashidhar has been a journalist for over six years and has worked with The Times of India, The Financial Express and MediaNama, his last assignment. He is a fine bloke, and by that, I mean unusually quiet. Over the years, Shashidhar has written on several subjects. Banking, startups and technology, media, and also financial technology. He started his career on the desk at the old lady of Boribunder. At The Ken, Shashidhar works out of Mumbai and writes on telecom and financial technology. What he really wants to talk about though is his vinyl collection.

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