Bharti Profit Climbs on Subs Growth

Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India’s largest mobile operator, reported another quarter of robust growth Friday, with net income climbing 37 percent on a 45 percent increase in revenues. (See Bharti Reports Fiscal Q4.)

For the fourth quarter of the financial year ended March 31, Bharti reported net income of INR18.53 billion ($460.37 million) -- above analysts’ estimates of INR18 billion -- on revenues of INR78.19 billion ($1.95 billion). Full-year net income was 57 percent higher at 67.01 billion rupees ($1.67 billion).

The operator’s mobile subscriber base soared by 67 percent year on year to just under 62 million, while fixed-line and broadband subscribers grew 22 percent to 2.28 million, giving it a total customer base of 64.27 million. Bharti continues to gain market share, up from 22.4 percent last year to 23.8 percent.

India’s mobile market is in an accelerated growth phase as operators push out from the cities to the country’s vast rural areas, where around 70 percent of its 1.1 billion population resides. With such a large population, India’s teledensity -- the number of phones for every 100 people -- remains at just 26 percent, leaving great potential for further growth.

Bharti says around 55 percent of its new subscribers are in rural areas and the company is planning to spend $3.4 billion to expand network coverage this year.

Bharti shares closed INR81.10 (9.6%) higher Friday at INR925.30 ($23.03) on the Bombay Stock Exchange.

That rise was also prompted by a report in The Financial Times that Bharti is considering a bid for pan-African player Mobile Telephone Networks (MTN) .

Shares in MTN closed 7.53 rand (5.7%) higher at a record 140.53 rand on the Johannesburg stock exchange. The stock has gained 38 percent in the past year.

Both companies denied the report Friday, with MTN issuing a statement that it “receives tentative approaches from time to time, which are always evaluated by the company,” but “the board of MTN has not received any specific proposal.”

Akhil Gupta, Bharti’s joint managing director, told CNBC TV the report is “absolutely wrong.”

"But having said that, we have always maintained that we believe that it may be a good time for us now to look internationally for expansion,” he said. “We will continue to do so and we will continue to evaluate whatever comes to us, but the Financial Times report is not correct."

South Africa-based MTN, which reported its quarterly subscriber numbers on Wednesday, has 68.21 million subscribers in 21 countries across Africa and the Middle East. (See MTN Reports Q1 Subs.) Its emerging markets assets make it an attractive potential investment, and Vodafone Group plc (NYSE: VOD) has reportedly been sniffing around the company.

Bharti has expressed interest in moving into Africa before, bidding for a 51 percent stake in Telkom Kenya , which was eventually acquired by Orange (NYSE: FTE). (See FT Takes Over Telkom Kenya.)

Meanwhile, Bharti is preparing to launch a GSM operator in Sri Lanka, where it won the country's fifth mobile license in January 2007. The launch has been pushed back from March to September.

— Nicole Willing, Reporter, Light Reading

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