AIRTEL PROFIT FALLS 55% TO 3YEAR LOW ON JIO ONSLAUGHT

Airtel Ltd posted a 55% decline in quarterly profit, the sharpest fall in three years, as free services offered by new entrant Reliance Jio Infocomm Ltd took its toll on India’s largest telecom services provider.

Net profit fell to ₹503.6 crore in the three months ended December 31, from ₹1,108.2 crore in the year earlier, the company said on Tuesday. Analysts had expected Airtel to post a profit of ₹1,087 crore, according to Reuters.

Revenue fell 3% to ₹23,335.7 crore in the period.

Earnings before interest, tax, depreciation and amortisation — an indicator of operating profitability—increased to ₹8,570.5 crore, from ₹8,474.9 crore a year ago.

Mukesh Ambani’s Reliance Jio Infocomm launched its services in September with a range of freebies. In December, Jio said it will provide free voice calling, text messaging and data services until the end of March, extending its inaugural offer by three months, as it sought to win more customers from rivals it accused of not providing adequate points of interconnection to its customers. In response, rivals have had to lower prices and redesign tariff plans to retain users.

“The quarter has seen turbulence due to the continued predatory pricing by a new operator. The present termination costs at 14 paise, which are well below cost, has resulted in a tsunami of minutes terminating into our network. This has led to an unprecedented year-on-year revenue decline for the industry, pressure on margins and a serious impact on the financial health of the sector,” Airtel’s chief executive Gopal Vittal said in a statement.