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Bharti Profits Continue to Climb

Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India's largest mobile operator, has put in another strong quarter of growth, reporting a 53 percent increase in revenues and a doubling of net profit during its fiscal first quarter. (See Bharti Reports Q1.)

The carrier reported net income of 15.12 billion Indian rupees (US$374.63 million) on revenues of INR59.05 billion ($1.46 billion), compared with profits of INR7.55 billion ($187.07 million) and revenues of INR38.56 billion ($955.4 million) in the first quarter of last year. Analysts polled by Reuters Research had expected a net profit of INR14.76 billion ($365.71 million).

During the quarter, Bharti signed up 5.56 million new mobile customers and 101,000 fixed-line and broadband customers, taking its total customer base to 44.68 million. That was its highest-ever quarterly growth in mobile subscribers, pushing its share of the Indian wireless market to 23.5 percent, up from 21.1 percent in the first quarter of last year.

But there were signs that Bharti’s push towards adding lower-end subscribers, particularly in rural areas, is slowing revenue growth. Revenues were below analysts’ estimates of INR59.58 billion ($1.48 billion), as average revenue per user (ARPU) fell to INR390 ($9.66) from INR441 ($10.93) last year. Average minutes of use were 478 per month, up from 441 last year, but only 3 minutes higher than last quarter.

During the quarter, Bharti cut prepaid connection fees and the price of overseas calls -- a reflection of the highly competitive Indian market, where calls are as low as 2 cents per minute. Bharti’s share of new customers dropped to 29.3 percent, from 32.6 percent in the fourth quarter.

The operator’s share price on the Bombay Stock Exchange fell today by INR21.55 (53 cents), or 2.3 percent, to close at INR925.25 ($22.92), largely on profit taking -- the stock has gained 10.7 percent this month.

Helping boost the stock in recent weeks was a $900 million deal with Nokia Networks to expand Bharti’s network capacity and its coverage in rural areas. (See Nokia Siemens Lands $900M India Deal.)

In a statement issued this morning, Bharti chairman Sunil Mittal noted that the Indian telecom market “is entering the next phase of growth” and the carrier intends “to expand our network aggressively to enhance penetration in the rural markets and be at the forefront of this growth.” Bharti has set aside a $3.5 billion capex budget for the fiscal year to build out its network.

India’s mobile operators, which added a record 7.34 million new subscribers in June alone, are ramping up their expansion plans for rural areas, where two thirds of India’s 1.1 billion people live and there are 6 telephones for every 100 people. Bharti’s network covered 42 percent of the country’s population a year ago and had extended to 62 percent by the end of June.

— Nicole Willing, Reporter, Light Reading

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