Telecom Sector – Results and Beyond…

  • Bharti Airtel records marginal growth in profits of 3%. More importantly, the African business records substantial decrease in losses.

  • It may be noted that that like other Indian companies’ overseas foray, Bharti had also faced rough weather in its African business which now finally seems to be coming on stream.
  • The company has also announced share buyback program which as per conventional finance, reflects its confidence in future. However, the going is certainly not going to be easy, considering the imminent launch of 4G services by Reliance Jio. It may be recalled that the entry of Reliance group in telecom space in 2002 had shaken the whole industry, completely upsetting the industry dynamics. .
  • Similarly, Idea Cellular has posted strong growth of nearly 13% in revenues and also an impressive growth in operating profit. However, net profit has come down by as much as 39% due to sharp increase in financing cost and lower other income. It is interesting to note that the company has recorded impressive growth over last few years, after being in the ‘also ran’ category for a long time.
  • Another telecom player, Norway based Telenor, posted a record loss of about Rs 2,500 crore for the quarter, more than 90% of which is due to impairment and write-downs. The write downs coupled with the global head’s statement putting conditions on its long term presence in the country point towards group’s serious deliberations on the question of exiting the country. The company, an established global player, is actually a fringe player in  the Indian market and its exit may actually be good for the industry which is in need of consolidation.
  • Beyond the quarterly numbers, the major players seem to be gearing up for the big fight expected after the launch of Reliance Jio. While that is certainly going to open up choices for the consumer, the sustainability of the players would also be a concern, specially considering the large debt exposure these companies have.

 
 
 

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