Airtel shares jump by 10% despite an unexpected quarterly loss

Airtel shares jump by 10% despite an unexpected quarterly loss
Bharti Airtel posted an unexpected loss of over half a billion dollars in the latest fourth quarter.BCCL
  • Shares of Bharti Airtel jumped by 10% hitting a new 52-week high of ₹591.85, despite the telco reporting an unexpected quarterly loss.
  • However, Airtel noted that the unexpected loss was due to adoption of Ind AS 116 from April 1, 2019, which relates to leased assets and their accounting.
  • Its revenues for the March 2020 quarter grew by more than 15% compared to the same period last year, suggesting that there is healthy growth despite the COVID-19 headwinds.
The share price of Bharti Airtel jumped by 10% even as the company posted an unexpected quarterly loss of ₹5,237 crore in the fourth quarter ended fiscal year 2020. The Airtel stock hit a 52-week high in the process, continuing its rally in May with an overall increase of almost 10% in 13 trading sessions. At the time of writing, the Airtel share price was at ₹591.85.

Airtel shares jump by 10% despite an unexpected quarterly loss
Airtel share price in May 2020BSE / Business Insider India / Flourish

Airtel's loss was mainly on account of making provision for paying statutory dues. The company, which had posted a profit of ₹107 crore in the same period a year ago, said it is monitoring the COVID-19 pandemic situation closely to identify key risks, and taking immediate actions to minimise any potential disruption to business.

Particulars (for March, 2020 quarter)Amount in ₹ crore
Consolidation revenue23,722.7
Net profit/loss before exceptional items-471
Net profit/loss after exceptional items-5,237

The company posted revenue of ₹20,602.2 crore in the corresponding quarter of 2018-19. Airtel's statement said that March 2020 numbers are not comparable with prior period due to adoption of Ind AS 116 with effect from April 1,2019.

Airtel posted exceptional items totalling ₹7,004 crore during the quarter ended March 31, 2020. This includes charges on account of reassessment of regulatory cost based on a recent order on one time spectrum charge, interest on provision of license fee and spectrum usage charges, and other heads.

Citing the Adjusted Gross Revenue (AGR) liability case, the company said during the quarter the group has further recorded interest of ₹870.6 crore, which has been presented as exceptional item.

The total capital expenditure for the just ended quarter stood at ₹11,339 crore.

For the full year ended March 31, 2020, the company posted a net loss of ₹32,183.2 crore and revenue of ₹87,539 crore. At the end of FY 2019, Bharti Airtel had reported net profit of ₹409.5 crore and revenue of ₹80,780.2 crore.

Bharti Airtel's MD and CEO, India & South Asia, Gopal Vittal, said, "These are unprecedented times for every one across the world as we battle the impact of COVID-19 and its consequent impact on livelihoods."

He added that telecom has played essential role in keeping the country going during the pandemic, and hoped that government would implement recommendations of the regulator and bring down the levies and taxes that the sector is subjected to.

Bharti Airtel said the company has undertaken a capex investment of ₹25,359 crore during the year to ensure strong customer experience besides front-ending some investment to ensure seamless services during the ongoing pandemic.

Bharti Airtel said its overall customer base stands at 423 million across 16 countries.

Notably, its average revenue per user - a key metric for telecom companies - was at ₹154 against ₹123 in year ago period, and ₹135 in December quarter.

"India revenues for Q4'20 at ₹17,438 crore have increased by 14.4% YoY on a reported basis. Mobile revenues have witnessed a year on year growth of 21.8% primarily led by increase in 4G customer base coupled with improved tariffs," the statement said.

The company said that in line with its policy of passing through dividends received from Infratel, the Board of Directors has recommend a dividend of Rs. 2 per share for FY 2019-20, subject to shareholders' nod.

Consolidated net debt (including lease obligations) was pegged at ₹1,18,859 crore.

With inputs from PTI.

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