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| Bharti Q2 net growth rate slows down on price war, competition |
| Press Trust of India / New Delhi Oct 30, 2009, 16:01 IST |
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Bharti Airtel today reported a 13 per cent rise in the second quarter net profit at Rs 2,321 crore as cheap call rates offered by competitors and rising number of low-tariff customers pulled down the rate of growth.
Chairman Sunil Mittal, however, said the company is ready to face the challenges posed by heightened competition.
Airtel's consolidated revenue grew nine per cent year-on-year to Rs 9,846 crore. It added 82.44 lakh subscribers against 85 lakh users in the first quarter this fiscal.
The EBITDA margin, a key reflector of profitability, was 42.1 per cent, compared with 41 in the year-ago quarter. Profit fell 8 per cent quarter-on-quarter.
Shares of the company hit the one-year low during the day. It was trading at 294.90, down 5.50 per cent, as the company maintained such pressures could impact company top or bottomline.
"With intense competition and irrational pricing in some pockets in short term, we could see some impact in top line and bottom line", Akhil Gupta, deputy CEO, Bharti said.
"In the near term, we are ready to face the challenges posed by heightened competition. We continue to maintain our market leadership position in the mobile segment, despite ever-increasing competitive intensity", Chairman Sunil Mittal said in the statement.
With competition hotting up and many telcos offering Rs 40 paise tariffs, the company saw a 24 per cent drop in average revenue per user in Q2 to Rs 252 with 52 per cent of the new additions coming from the low-paying rural subscribers.
Average minutes of usage fell an annual 15 per cent to 450 minutes. Average rate per minute also fell 15 per cent annually.
New telcos like Telenor, Etisalat are starting operation by December this year which would add to the already existing pressure, forcing companions like Bharti to drastically drop call charges and that would impact margins severely, said analysts.
Gupta, however, ruled out matching any of those low-price tariffs, saying, "We will be competitive, (but) there is no reason why we should match always the lowest common denominator. The company would emerge stronger from the challenges."
Manoj Kohli, CEO, Bharti Airtel, said, "The company has a three-pronged strategy for growth. Priority number one will be to remain the leader in market share while creating new revenue streams and a linear business model will be the other two priorities."
The company, which called off a proposed $23 billion merger with South Africa’s MTN Group, said it would look for emerging markets like Africa for acquisitions as potential for growth is maximum there.
Telenor which has a tie up with real estate firm Unitech has said it aims to capture 8 per cent share after it starts services later this year.
Vodafone increased its share of wireless users in India to 17.7 per cent at the end of August from 17.3 per cent a year earlier, while Bharti’s fell to 23.6 per cent from 24.5 per cent in the same period, according to Trai.
Bharti has 11.34 crore customers at the end of September.
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