The profit of Bharti Airtel has almost crashed due to aggressive pricing strategy of Reliance Jio. The net profit in March quarter falls by 72% to Rs. 373 Crore. This is the second consecutive quarterly drop in its net profit. The think tank says that this massive fall is due to the free voice and data services offered by Reliance Jio until March 31. In order to retain the customers, the company had to slash the tariff price significantly.
In the previous year, the same quarter has reported the net profit of 1,319.4 Cr. However a team of 15 Bloomberg analysts expected to report a net profit of Rs. 542.5 Cr. If we look up at the figures, the net profit has dropped 55% in just three months.
According to another report, in the March quarter, the revenue dropped by 12% to Rs. 21,934.6 crore. Similarly, the EBITA margin was down to 13% sliding to Rs.7, 992.8 crores from Rs.9, 188.1.
The monthly average revenue per user fell down massively to Rs.158. Last year this quarter has reported a growth of Rs.194.
If we compare the ARPU data, it has also fallen by 4.5% to Rs. 184 in March quarter. However, in the same quarter last year, the ARPU data was Rs. 194. The report suggests that the network has seen the growth in a number of minutes spent on calls. It grew by 13.4 % in a full year.
Seeing the decline in the growth, the telecom giant has slashed the capital expenditure to Rs. 3,808.2 Cr in March quarter. It is about 37.13% reduction from last year’s Rs. 6,057.4 Cr.
Since the inception of the 4G cellular network, the tariff plans have become friendlier. In its report, the company said that last year was marked by various business and industry changes along with new operators in India. The free voice and data offers are the main cause behind the unique wave of consolidation in the telecom sector.
If we recall, Jio had launched its promotional plans like Welcome Offer, Happy New Year offer, and Jio Dhan Dhana Dhan. Under the Welcome offer, the company has provided free voice and data calls until December 31. It was extended till March 31 under Happy New Year offer. Both of these plans had offered free voice and data services. The Jio user base ramped up massively, to more than 100 million, since the launch of 4G in September last year.