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Bharti Airtel: Depreciation & taxes drag profits - Views on News from Equitymaster
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Bharti Airtel: Depreciation & taxes drag profits
May 5, 2011

Bharti Airtel declared the results for fourth quarter and financial year 2010-11 (FY11). The company has reported 3% QoQ in total revenues while the net profits grew by 8% QoQ during the quarter. Here is our analysis of the results.

Performance summary
  • Consolidated sales grew by 3% QoQ during the fourth quarter of 2010-2011(4QFY11). For the full year 2010-2011 (FY11), sales grew by 42% YoY. The results for the full year include the results of the African operations and are hence not strictly comparable to the results of the previous year.
  • Mobile subscriber base in India grew by 6% QoQ during the quarter. Total count of subscribers stood at around 162 m at the end of March 2011. Total subscriber base on the network (including Asia and African operations) grew by 6% QoQ during the quarter.
  • Operating margins improved by 2% QoQ during the quarter owing to lower employee costs as well as lower selling and marketing expenses (as percentage of sales). The selling expenses had included one-time re-branding expenses of Rs 3.3 bn during the previous quarter, which was not there during the current quarter. For FY11, operating margins declined to 34% from the level of 40% seen during FY10.
  • Net profit witnessed a muted growth of 8% QoQ during the quarter. The growth was subdued by the higher depreciation charges as well as higher tax expenses. For FY11, net profits declined by 33% YoY. This was on account of lower operating margins as well as higher depreciation and interest charges.

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