Bharti Airtel posts 10th quarter of profit decline

INDIA-BHARTI-AIRTEL-RESULTS:Bharti Airtel posts 10th quarter of profit decline

new Delhi  August 8, 2012, 10:22 IST

new Delhi  08 08, 2012, 10:30 IST

 

India's top telecoms carrier Bharti Airtel reported its 10th straight quarter of profit decline as competition squeezed margins despite gaining a bigger subscriber share, sending its stock to the lowest level in more than two months.

Bharti dominated customer additions in the three months to June as its smaller rivals including Telenor's India unit braced for a cancellation of their operating permits. Still, all was not smooth sailing for the carrier nearly a third owned by Southeast Asia's top phone carrier SingTel as the market remained highly competitive.

Bharti, controlled by billionaire Sunil Mittal, said consolidated net profit fell 37 percent to 7.62 billion rupees for its fiscal first quarter ended June from a year earlier, missing analyst estimates.

"Telecom revenues in India have been depressed due to hyper-competition and recent regulatory and tax developments," Mittal, who is Bharti's chairman, said in a statement on Wednesday.

The Supreme Court of India said it would revoke all permits awarded to eight of Bharti's rivals such as Sistema and Idea Cellular in a scandal-tainted 2008 sale. The government is planning to hold a mobile airwaves auction in November before the permits expire.

Carriers have complained that the minimum bid price is too high, with Telenor and Sistema threatening to pull out of India if the auction becomes too costly.

While bigger carriers such as Bharti and Vodafone's local unit are not affected by the court order, they are looking to buy more airwaves to feed their overstretched networks in the world's second-biggest mobile phone market.

Voice call prices -- the mainstay of Indian mobile carriers -- have been stable in recent months, but the market is yet to recover from the sharp price cuts during a price war two years ago. Mobile data is at a nascent stage.

At a time when growth in its home market had started slowing, Bharti in 2010 ventured into Africa by acquiring Kuwaiti telecoms Zain's operations in 15 countries in a $9 billion deal and became the world's fifth-biggest mobile phone carrier by subscribers.

But high costs in Africa have kept margins under pressure and Bharti has yet to turn the African operations profitable.

Overall revenue rose 14 percent in the quarter ended June to 193.5 billion rupees, also missing estimates.

Analysts had expected Bharti, which operates in 20 countries across Asia and Africa, to post a net profit of 12.17 billion rupees on revenue of 195.79 billion rupees, according to Thomson Reuters I/B/E/S.

By 9:41 a.m., shares in Bharti fell 2.9 percent in a Mumbai market that rose 0.3 percent. The stock dropped as much as 3.9 percent after the earnings were announced.