Why Did Bharti Airtel’s Q4 Net Profit Drop by 23%?
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Synopsis
Bharti Airtel faces a challenging financial quarter with a significant drop in net profit. This article explores the reasons behind the 23% decline while highlighting the company's revenue growth and strategic focus on premium services.
Key Takeaways
- Net profit dropped by 22.68% in Q4 FY25.
- Revenue rose by 6.1% quarter-on-quarter.
- Airtel is focusing on higher-value services.
- ARPU increased to Rs 245, reinforcing premium strategy.
- Homes business saw a 21.3% growth YoY.
Mumbai, May 13 (NationPress) - On Tuesday, Bharti Airtel disclosed a 22.68% sequential reduction in its net profit for the fourth quarter (Q4) of FY25, primarily due to a significant increase in tax expenses impacting overall earnings.
The company's net profit fell to Rs 12,475.8 crore from Rs 16,134.6 crore in the preceding quarter (Q3), as reported in its stock exchange disclosure.
This profit decrease was mainly attributed to a change from a tax gain of Rs 757.3 crore in Q3 to a tax expense of Rs 2,891.9 crore in Q4, exerting pressure on profits despite an increase in revenue.
Bharti Airtel's operating revenue saw a 6.1% quarter-on-quarter (QoQ) rise, reaching Rs 47,876.2 crore in Q4, compared to Rs 45,129.3 crore in Q3.
This growth was fueled by robust performance in the India market, a rebound in reported currency revenues from Africa, and the complete impact of the Indus Towers consolidation.
Nevertheless, one sector that experienced a downturn was Airtel Business, which recorded a 2.7% year-on-year (YoY) revenue decline.
This contraction resulted from a strategic decision to phase out low-margin services such as global wholesale commodity voice and messaging.
The company stated that this strategic shift aligns with its broader vision to concentrate on higher-value, sustainable business segments.
In India, quarterly revenues increased by 6% to Rs 36,735 crore, bolstered by improved mobile segment realizations and strong growth in the homes division.
The average revenue per user (ARPU) climbed to Rs 245 in Q4, up from Rs 209 in the same quarter of the previous fiscal year, highlighting Airtel's premiumization strategy.
The homes business experienced remarkable growth, with a 21.3% YoY revenue surge, driven by significant customer additions and accelerated fiber and home-pass expansion.
During the quarter, Airtel added over 800,000 new customers, bringing its total customer base to 10 million.
Vice-Chairman and MD Gopal Vittal remarked that the company concluded the financial year robustly, despite the profit decline.
He emphasized that Airtel remains committed to premium growth segments, bolstered by strong cash flow and disciplined capital expenditures.
Airtel also prepaid Rs 5,985 crore in high-cost spectrum dues last quarter, accumulating total prepayments exceeding Rs 42,000 crore over the past two years, thereby fortifying its balance sheet.
Point of View
Bharti Airtel's financial performance reflects both challenges and opportunities in the telecom sector. The decline in profit, influenced by tax shifts, is counterbalanced by revenue growth, indicating a strategic pivot towards higher-value services. This dynamic approach could enhance Airtel's standing in a competitive market.
NationPress
08/06/2025
Frequently Asked Questions
What caused Bharti Airtel's profit decline in Q4?
The profit decline was primarily due to a significant increase in tax expenses, shifting from a tax gain in the previous quarter to a considerable tax expense.
How did Airtel's revenue perform in Q4?
Airtel's revenue from operations grew by 6.1% quarter-on-quarter, reaching Rs 47,876.2 crore.
What strategic changes is Airtel implementing?
Airtel is phasing out low-margin services to focus on higher-value, sustainable business areas.
How did the homes business perform?
The homes business experienced a strong 21.3% year-on-year revenue growth, driven by customer additions and expansion.
What is the current ARPU for Airtel?
The average revenue per user (ARPU) rose to Rs 245 in Q4, indicating a focus on premiumization.
