Hit hard by the free promotional offer of new entrant Reliance Jio, India's largest telecom operator Bharti Airtel has reported a decline of 55 per cent in its third quarter net profit.
India's No. 1 telco's net profit of Rs 504 crore for the three months ending December 2016 was sharply lower than previous year's (2015) third quarter profit which stood at Rs 1,108 crore.
The other reason for the fall in profits was due to demonetisation – the economic situation announced by Prime Minister Narendra Modi that weeded out 86 per cent of the country’s currency in circulation – leading to the largest cash crunch India has ever faced.
According to data from Thompson Reuters, analysts had expected profits to fall marginally to Rs 1,087 crore. Airtel just made halfway through those expectations.
Billionaire Sunil Bharti Mittal’s company and other carriers in India are facing an escalating price war after the country’s richest man Mukesh Ambani began commercial services in September.
Reliance Jio launched its fourth generation (4G) wireless internet services, that has led to a financially bleeding battle between telecom operators.
What Reliance Jio is offering, is “unfair competition”, Mittal had said at a conference in Delhi, while launching Airtel’s payments bank business.
"The quarter has seen turbulence due to the continued predatory pricing by a new operator," Gopal Vittal, MD and CEO, India & South Asia, at Airtel, said in the statement.
He said the present call termination cost of 14 paise, which is well below cost, has resulted in a tsunami of minutes terminating into Airtel's network.
