Undeterred by a 72% decline in the fourth quarter net profit, telecom major Bharti Airtel on Wednesday committed a capital expenditure of $3 billion in the current financial year, of which $500 million would be spent in Africa, the region analysts expect would do well in the future.
Bharti Airtel's Global Chief Financial Officer Nilanjan Roy said in a post-earnings conference call, the company's capex target for 2017-18 is $3 billion including $500 million for Africa operations.
The telecom major's stock on Wednesday closed at Rs 372.70, 8% up despite the company reporting a 72% fall in its fourth quarter (Jan-Mar) net profit at Rs 373.4 crore. During the day, the stock soared 10% to Rs 380.05.
Analysts are of the view that the rally is mainly on account of sentiment that the Africa region would do well in the future.
In constant currency terms, underlying revenues in its African operations grew by 2.6 per cent year-on-year (Y-o-Y). Data revenues at $157 million grew by 14.5 per cent year-on-year, led by an increase in the data customer base by 19.3 per cent and traffic by 77 per cent.
However, a technical analyst said that the actual results on Africa improvement would only be visible in the next 2-3 quarters.
Bharti Airtel's consolidated revenues were down 8.8 per cent year-on-year during the January-March period at Rs 21,935 crore. The company bore the brunt of reliance Jio's aggressive pricing strategy.
Reliance Jio launched its free voice and data plan in September last year, and extended it till March. It currently offers free voice services while its data tariffs are lower than those of the incumbents.
The telecom industry, which owes close to Rs 4.60 lakh crore to financial institutions and banks, has alleged that the predatory pricing by the new operator continues to impact the financial health of the sector.
Bharti Airtel's average revenue per user (ARPU) declined 18 per cent to Rs 158 in the period as against Rs 194 in the same period in the previous financial year.
Data continued to cannibalise voice and it was evident in the decline of the voice ARPU to Rs 114 from Rs 138 in the January-March quarter in the previous financial year. Even though the data ARPU at Rs 162 was higher than voice, it was 17 per cent lower than the Rs 196 data ARPU in January-March 2016.
The company made two key strategic announcements during the quarter - the acquisition of Telenor India and agreement with Tikona Digital Networks to acquire its 4G business. The company stands to gain on the spectrum front from both the deals.
While the acquisition of Telenor India would provide 43.4 MHz of additional airwaves in seven circles - Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West), and Assam - the definitive agreement with Tikona means 100 MHz spectrum in the 2300 MHz band and 350 sites in five telecom circles - Gujarat, UP (East), UP (West), Rajasthan, and Himachal Pradesh.