Bharti Tele-Ventures Ltd, which is preparing an ambitious initial public offer, is expected to bounce back in the black in the financial year 2004 with a net profit of Rs 205.7 crore, according to J M Morgan Stanley, the book running lead manager of IPO. Company officials, when contacted, did not wish to comment on the report in view of statutory restrictions.

To come out of the red, the company would have to make capital expenditure of Rs 1987.5 crore and Rs 1290.3 crore in the financial year 2002 and 2003 respectively. The J M Morgan Stanley estimates, a copy of which is available with Business Standard, were based as per the International Accounting Standards (IAS).

According to the report, net losses will increase from Rs 79.9 crore at the end of 2002 to Rs 217.3 crore at the end of 2003. Total operating cost will also increase from Rs 735.5 crore in 2002 to Rs 1,950.5 crore at the end of 2003.

But a massive 501.6 per cent expected jump in revenue to Rs 5,102.7 crore in 2004 from the present Rs 848.1 crore will help the company to come out of the red, the research report added.

The reason as cited in the report : BTVL's cumulative subscriber base (cellular and wireline) will go up from 7.02 lakh at the end of 2001 to over 44 lakh by 2004, implying 85 per cent annual gains. In the same period, its market share will increase 23.4 per cent in cellular and 1 per cent in wireline which will, in turn, help the company record an annual growth of 82 per cent in revenues and 104 per cent in earnings before interest, tax, depreciation and amortisation (EBITDA).

The expected loss in the current fiscal as well as in 2003 , as predicted by the report, was also in line with the company's own submission. In the IPO offer document submitted to Sebi last week, BTVL had stated that "it has not paid any dividends since its incorporation and does not anticipate paying dividends for the forseeable future. The company's major sources of cash flow is expected to be its share of dividends paid by its subsidiaries, receipt of management fees and other receiopts from its subsidiaries. BTVL's cash flow will be limited as long as its subsidiaries have accumulated losses which for certain subsiadiaries are likely to contunue for the forseeable future."

BTVL has four subsidiaries--Bharti Cellular, Bharti Telenet, Bharti Telesonic and Bharti Broadband Networks.