Bharti Adds 2.26M Subscribers in Q3

Bharti Tele-Ventures Ltd. , India's largest mobile operator, saw revenues increase 42 percent year on year as mobile subscriber numbers soared during the third quarter. (See Bharti Reports Q3.)

At Rs. 30.26 billion ($683.42 million), quarterly revenues were slightly above analysts’ expectations of Rs. 29.79 billion ($672,81 million) according to Reuters.

The carrier signed up 2.26 million mobile phone customers during the three-month period, its highest ever quarterly addition, taking its total mobile user base to 16.33 million. That was a leap of 66 percent from the end of 2004. Bharti’s total subscribers, including fixed-line, were up 65 percent to 17.53 million.

Net profit of Rs. 5.45 billion ($123.08 million) was up 25 percent, but below the estimated Rs. 5.71 billion ($128.96 million). The shortfall came as Bharti increased its investment in network expansion to handle the rise in subscribers and tap into further demand. (See India's Telecom Market Accelerates.)

The operator is on track to spend $1.3 billion this financial year on building out its network into smaller towns and cities and plans to splash out another $1.5 billion next year, to be funded in part by loans.

Its profit margin, which was down 2.5 percent to 18 percent, was also affected by falling average revenue per user (ARPU). The third quarter saw the introduction of “lifetime validity” calling plans by the major mobile operators, including Bharti, for the lower end of the market -- offering prepaid cards for a one-off payment of Rs. 999 ($22.56).

Figures from the Telecom Regulatory Authority of India (TRAI) show ARPU in India is just $8, compared to $18.90 for the Asia/Pacific region as a whole and the global average of $21.30.

In a recent note on the new tariffs, Lehman Brothers analysts wrote: “We believe operators need to increase monthly net adds by a minimum 50% to recoup this revenue loss.”

India’s mobile subscriber base grew by 4.46 million in December to 75.92 million, compared with an increase of 3.51 million in November.

The tariffs aim to boost telecom penetration in India, which reached 11 phones per 100 people in December. Lehman added, “We expect the Rs999 plans to be extremely positive for subscriber growth and penetration... We do believe that Bharti’s wider coverage, distribution lead, and GSM handset pricing enables it to capture a greater chunk of this growth acceleration over CDMA & regional operators.”

Bharti, which operates in all 23 of India’s telecom “circles” or markets, holds the largest share of the country's 58.5 million-user GSM market, with 27.9 percent.

Bharti also announced plans to rename the company Bharti Airtel Ltd. subject to shareholder and regulatory approval. (See Bharti Becomes Airtel.) The switch to using its Airtel brand comes after the company has shifted from being a telecom investment firm to a service provider, following its merger with Bharti Cellular Limited and Bharti Infotel Limited.

Bharti’s shares rose 0.9 percent to Rs 347.45 ($7.7) yesterday on the Bombay Stock Exchange.

— Nicole Willing, Reporter, Light Reading