Indian Broadband Provider ACT Sees Decline in Profits After Failed Acquisition Deal
- ByStartupStory | April 19, 2023
ACT, a high-speed fiber-optic broadband provider in India, experienced a drop in profits due to a failed acquisition deal with Partners Group, an existing investor in the company. Despite a 9.8% growth in operating revenue to Rs 2,157 crore in FY22 from Rs 1,965 crore in FY21, the company’s profit decreased by over 14%. Internet services accounted for 89.1% of the total operating revenue, while collections from cable television and distribution services formed 8.4% of the revenue, but income from this vertical decreased by 7.1%.
The largest cost center for ACT was employee benefits, which increased by 25.5% to Rs 483 crore in FY22. However, the company made Rs 36.2 crore from interest on fixed deposits, which increased by 27.4% during the same period. ACT’s net tangible assets were Rs 1,678 crore in FY22, against which the company charged depreciation and amortization of Rs 384 crore.
Kartik Gaggar, founder of Indian ed-tech startup Rooftop, commented on the challenges faced by broadband providers like ACT, including competition from larger companies like Jio and Airtel, as well as the complexities of the business in terms of permits and access.
Gaggar continued to explain that while ACT has been profitable, investors know that capex spending is always a concern in an evolving market, making it challenging for smaller players to expand. With a spread-out network, ACT must work hard to protect existing markets while also expanding for growth.
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