Bharti: Robust ring

The long distance and group data services division helps Bharti to post improved results

Bharti Tele-Ventures has reported an improved performance in the March quarter, with total revenues growing sequentially by 22 per cent to Rs 1553.27 crore and net profit rising 88.3 per cent to Rs 303.77 crore.

On the bourses, the stock gained around 5.5 per cent in Friday trading, to close at Rs 177.1.

A key factor that contributed to the company's growth was an improvement in the long distance and group data services business. Revenues of this division recorded a sequential growth of 43 per cent to Rs 495.06 crore and a 39 per cent jump in EBIT (earnings before interest and tax) to Rs 164.95 crore.

Customer addition continued at a rapid pace - the company's mobile customers increased sequentially by 18 per cent to 6,504, 314 million subscribers by the March quarter. As a result, Bharti's market share in the GSM market was pegged at approximately 25 per cent.

However, profitability of the mobility segment grew only marginally "" EBIT in the March quarter, sequentially rose to Rs 318.19 crore. It could be explained by blended ARPU dropping sequentially by 5 per cent to Rs 493 crore in the March quarter.

Going forward, analysts point out that the company's ARPUs could remain under pressure due to the increasingly aggressive pricing strategies adopted by competitors, especially those in the CDMA segment.

Overall margins dropped sequentially by 300 basis points to 34.2 per cent in the March quarter, due to access and inter-connect charges as a percentage of total revenues rising 443 basis points.

Sales and marketing costs jumped up 76 basis points and other expenditure rose 222 basis points. The company has continued its strategy of expanding its network to cover the entire nation and it had recently acquired Shyam Telecom's 67.5 per cent stake in Hexacom for approximately Rs 430 crore.

And with the Rajasthan market growing at 8-10 per cent compared with the national average of 6-7 per cent, the benefits should be felt in the company's results in the next few quarters.

Satyam Computer Services

There was a steep sell-off in the Satyam ADR after the Q4 results were announced, and the stock was under pressure on Friday in the domestic markets as well.

The reason was simple "" Satyam's earnings per share for the quarter fell to Rs 4.46, well below the Rs 4.63 notched up in the preceding quarter, and below its guidance of Rs 4.58 to Rs 4.65.

A forex loss of Rs 21 crore was responsible for the company being unable to meet the guidance, and the management points out that, excluding the forex loss, the earnings per share for Q4 would have been Rs 5.11, well above the forecast.

Also, the shortfall in earnings was despite the company comfortably beating its revenue guidance for the quarter. EBITDA margin expanded slightly from 26.22 per cent in Q3 to 26.34 per cent in Q4, mainly due to lower travelling expenses.

The telecom and financial services verticals did well in Q4, and domestic business in the telecom vertical rose sharply. In Q4, offshore utilisation rates, including trainees ,fell to 74.02 per cent from 76.52 per cent in the preceding quarter, while billing rates were more or less stable.

For FY 2004, while revenue in dollar terms increased by 32.32 per cent, hours billed actually rose by 34.23 per cent, the lower revenue rise being due to lower billing rates.

In FY 2003, while dollar revenues rose by 15.12 per cent, hours billed rose 22.79 per cent, which shows that impact of lower billing rates was much higher. On the other hand, the negative impact of rupee appreciation was much larger in FY 2004.

Going forward, the management has warned that margins would decline in the current quarter, thanks to annual salary increments and continued rupee appreciation. EPS for the quarter is expected to be between Rs 4.76 and Rs 4.78.

Income from software services is expected to be between Rs 728 crore and Rs 732 crore, no great shakes considering that it rose from Rs 662 crore in Q3 to Rs 720 crore in Q4.

On the positive side, the company plans to recruit between 3,500 and 4,000 people in FY 2005 and BPO subsidiary Nipuna is expected to achieve cash break-even.

With contributions from Amriteshwar Mathur