Bumper results for Bharti; 123% jump in profit

Registering a 123 per cent increase, telecom operator Bharti Airtel Ltd's net profit stood at Rs 1,215 crore for the quarter ending December 31, as against Rs 545 crore for the corresponding quarter last year.

Driven by economies of scale arising from a record expansion in subscriber base (5 million new customers) this quarter, Bharti posted its highest-ever earnings before interest, tax, depreciation and amortisation (EBITDA) margins of 40.8 per cent, against 37 per cent last year. The company's revenues went up by 62 per cent to Rs 4,913 crore in the said period.

Akhil Gupta, joint managing director and chief financial offer, Bharti Airtel, said, "The company had increased its population coverage from 50 per cent to 54 per cent and its presence to 4,581 towns and villages (from 4,357 in the previous trailing quarter)."

The Bharti share today closed over 1.89 per cent higher at Rs 689, against yesterday's closing price of Rs 676.35

Analysts, however, are divided over the sustainability of such results.

Said Shubham Majumder, telecom analyst with Macquaire Research, "We see the telecom market continuing to grow and margins expand as infrastructure-sharing will reduce costs."

Sanjay Chawla of J P Morgan, however, said that although Bharti outperformed the industry EBITDA (38%) on account of the sheer scale of its revenue base and strong management skills, such high margins were unlikely to continue, especially with roaming charges set to fall.

Competitive pressures are reflected in the fact that Bharti's average revenue per user (ARPU) fell by 2.5 per cent to Rs 427 this quarter, from Rs 438 in the quarter ended September. However, the minutes of usage per subscriber increased to 467 from 451 earlier.