Bharti: Short margin services
Otherwise, the lower tariffs, resulting from a cut in roaming and long distance charges could have hurt profitability; in fact, the average revenue per user (arpu) fell to Rs 350 from Rs 357 in the March 2008 quarter. Also, the average revenue per minute, which fell 5 per cent to 72 paise in the March 2008 quarter, has fallen further to just under 66 paise in the June quarter, a drop of over 8 per cent. However, India's biggest wireless company continues to grow, adding a record 7.5 million customers during the quarter. That helped revenues grow 8.5 per cent sequentially to Rs 8,483 crore. The rising trend in the minutes of usage (mou) continued going up to 537 minutes per subscriber per month from 507 in the previous quarter. The total number of minutes too has seen an increase of around 18 per cent sequentially. It appears that the profitability for the mobile division may be under pressure. At 30.7 per cent, the operating margin was lower sequentially though this is not strictly comparable with that in the March 2008 quarter because of changes in the carriage charges. |
| The management believes that tariffs are unlikely to fall further from these levels. Profit margins for the non-mobile businesses""enterprise and telemedia services""too have fallen though it must be remembered that the profitability of the enterprise segment does tend to be somewhat volatile. |
| Bharti continues to improve coverage""-it now covers 74 per cent of the market. However, competition both from incumbent and newcomers will keep tariffs down. The stock lost 2 per cent in Thursday's session and at the current price of Rs 800, the stock trades at 16.6 times estimated FY09 revenues. That's not expensive but the Street's a tad cautious believing that profitability for this telecom major may have peaked. |