“For 3QFY2014, Bharti Airtel’s revenues as well as EBITDA came inline with the expectations while bottomline disappointed due to exceptional tax related provisions. Bharti’s consolidated revenues grew by 2.8% qoq to Rs. 21,939cr. The growth in 
revenues was mainly fueled by a strong 4.1% qoq increase in USD terms in the top line from African operations to US$1,165mn, which came as a positive surprise. Revenues from domestic mobile services grew by 2.5% qoq to 11,645cr. KPI’s of India mobile business came in a tad below expectations. The voice ARPM grew by ~1% qoq to 37.1paise while MOU declined by ~1% qoq to 434 min from 437 in 2QFY2014. Voice ARPU registered a growth of 0.6% qoq to Rs. 161. Non voice revenues’ share increased to 17.2% from 16.5% in 2QFY2014; share of data revenues grew to 10.3% from 9.2% in 2QFY2014. In India, Bharti Airtel witnessed addition of 3.8mn data subscribers, leading to overall data customer base to 54.4mn. Bharti’ 3G customer base during the quarter increased by 18% qoq to ~9.5mn with data usage per customer increasing by 8% qoq to 249MBs from 231MBs in 2QFY2014. Due to reduction in data tariffs, Data realization rate per MB declined marginally to 30.1paise. Bharti Airtel reported healthy KPIs for Africa business. Overall ARPU grew by 1% qoq to US¢5.8. Voice ARPU as well as MOU declined 1% qoq but the share of non voice revenues grew substantially from 17.9% in 2QFY2014 to 19.6% in 3QFY2014.
On consolidated level, Bharti’s EBITDA margin increased by ~25bp qoq to 32.3%. India mobile services registered ~60bp qoq EBITDA margin expansion to 34.1% while Africa EBITDA margin declined by ~110bp qoq to 25.8%. Profitability was hit due to exceptional tax provision of Rs. 221cr. Adjusting to that, net profit came inline with the expectations at Rs. 831cr. Overall, the key surprise from the results was better than expected India cellular margins and Africa business revenue growth. However similar to Idea, MOU growth was slow – implying changing industry dynamics of slowing MOU due to free minutes being curtailed. Bharti continues to be our preferred pick amongst telcos due to its low-cost integrated model (owned tower infrastructure), established leadership in revenue and subscriber market share and relatively better KPIs.”
