Bharti Infratel Q2 profit up 61% YoY at Rs 964 crore

NEW DELHI: Bharti Infratel reported a 61 per cent year-on-year (YoY) jump in net profit in the second quarter of FY20, helped by a change in accounting standard which lowered operating costs, and a higher net finance income.

India’s sole listed telecom tower company’s consolidated net profit for the July-September period came in at Rs 964 crore. Net profit was also higher that the Rs 887 crore reported in the June quarter, FY19.

Quarterly consolidated revenue, though, fell 1 per cent YoY to Rs 3,638 crore, the company said in a statement Monday.

The company’s consolidated earnings before interest, tax, depreciation & amortisation (Ebitda) rose 25 per cent YoY to Rs 1,885 crore, which was lower than the Rs 1,953 crore figure posted in the June quarter. Operating free cash flow rose 8 per cent YoY to Rs 1,080 crore, which was lower than the Rs 1,207 crore it clocked in the previous quarter.

Without the adoption the Ind AS 116 accounting standard, the company’s revenue would be down 3 per cent on year, Ebitda would be lower by 1 per cent and operating free cash flows would have fallen 1 per cent as well, the company said in the statement.

Essentially, Ind-AS 116 enables companies to recognise leases (towers in this case) as assets in the balance sheet from April 1, 2019, and as such, the relevant lease rentals do not get reflected in the network opex – thus pushing up earnings before interest, tax, depreciation & amortization (Ebitda) - but as an element of depreciation cost.

The company’s consolidated expenses for the September quarter fell 19 per cent YoY to Rs 1,752.7 crore. The largest components were power & fuel, which fell 3 per cent, followed by repairs & maintenance expenses that fell 9 per cent. There was no rent paid in the just ended quarter, against a rental expense of Rs 3,168 crore a year back.

But depreciation and amortization costs rose 32 per cent on year to Rs 786.5 crore. Quarterly net finance income rose to Rs 1,251 crore compared with a net finance cost of Rs 442 crore a year back, to support net profit.

“Bharti Infratel has continued on the positive trend in quarterly net additions on both towers and co-locations during the quarter ended September 30, 2019,” Bharti Infratel chairman Akhil Gupta, said in a statement.

Co-locations are points where a tower company deploys mobile telecom antennae of multiple carriers on a single structure.

“We continue to believe that there is a strong growth potential in telecom passive infrastructure in the country as telecom networks keep pace with the continuing exponential data consumption growth. Both Bharti Infratel and Indus towers are well poised with their industry-leading scale and strong financial position to partner with mobile operators as they look to intensify their networks,” Gupta added.

Indus Towers, a telecom joint venture between Bharti Airtel and Vodafone Idea, is currently merging with Bharti Infratel, which is a tower unit of telecom major Bharti Airtel.

Bharti Infratel reported 159 net on-quarter additions in co-locations, taking the total count to 1,73,406 as of September-end. The company though lost a whopping 1,106 co-locations on year.

The company’s tower base rose 1,298 YoY and 789 sequentially to 93,421 in the fiscal second quarter.

Bharti Infratel’s tower base includes units by virtue of its 42 per cent stake in Indus Towers.