Bharti Airtel (BHARTIARTL) Q4 15/16 earnings summary

Executive summary

• FY16 consolidated revenue rose 4.9% to ₹965.3B; growth was 6.9% excluding India IUC changes and African tower disposals.

• EBITDA before exceptional items increased 8.7% to ₹341.9B; EBITDA margin expanded to 35.4% from 34.2%.

• Net income reached ₹54.8B, up 5.8%; excluding exceptional items, net income was ₹47.7B, down 21.5% YoY.

Financial highlights

• FY16 revenue ₹965.3B vs ₹920.4B; EBITDA ₹341.9B vs ₹314.5B; EBIT ₹166.4B, up 5.0%, with a flat 17.2% margin.

• Profit before tax and exceptional items fell 8.2% to ₹106.2B; net finance costs rose ₹20.4B to ₹68.9B, while forex and derivative losses eased to ₹18.1B from ₹21.5B.

• Cash profit from operations before derivatives and exchange fluctuations was ₹289.2B vs ₹285.3B; operating free cash flow rose 6.4% to ₹136.0B.

• Capex was ₹205.9B, up 10.3%; depreciation and amortisation rose 12.4% to ₹174.5B, mainly from spectrum amortisation.

• India and South Asia revenue grew 9.6% to ₹723.9B; Africa revenue grew 3.1% in constant currency, or 4.2% excluding tower disposals.

Outlook and guidance

• Project Leap targets ₹600B of network investment over three years; plans include over 160,000 base stations and mobile broadband access for 500,000+ villages.

• India home broadband copper upgrades were targeted to lift speeds from 16 Mbps to 50 Mbps by FY17; fibre-to-home plans target speeds up to 100 Mbps.

• India data growth, wider 4G coverage, the payments bank, and African data and mobile-money expansion were identified as growth opportunities.

• Competitive entry, pricing pressure, data penetration, network quality and regulatory conditions were highlighted as challenges to execution.