Subs Growth Drives Bharti, IDEA Revenues
Bharti's net profit rose 34 percent to 20.25 billion Indian Rupees (US$473.75 million) as revenues climbed 44 percent to INR84.8 billion ($1.98 billion). (See Bharti Reports Q1 Growth.) Analysts had expected a net income of INR19.34 billion ($451.51 million), according to Reuters.
Bharti added a record 7.4 million new mobile subscribers during the quarter for a total of 69.38 million. India's largest mobile operator, Bharti had increased its market share from 23.1 percent to 24.2 percent by the end of the quarter.
It also added 2.4 million subscribers to its "Telemedia" services, which include fixed line telephony and broadband, for a total customer base of 71.78 million. That was 61 percent higher than the same quarter last year.
Increasing competition and preparation for the entry of new licensed operators is prompting operators to cut their call rates in what is already one of the cheapest markets in the world. In April Bharti reduced the price of domestic long distance calls by more than 40 percent to just INR1.5 (3.5 cents). That has put pressure on the carrier's profit margin, which slipped from 25.6 percent in the first quarter of the previous fiscal year to 23.9 percent.
Profits came under pressure at regional operator IDEA Cellular, which provides mobile coverage in 11 of India's 23 telecom circles, or service areas. (See A Guide to India's Telecom Operators.)
Net income at the carrier fell 14.72 percent year on year to INR2.63 billion ($61.4 million), even as revenues climbed by 47.4 percent to INR21.78 billion ($508.47 million). (See IDEA Cellular Reports Q1.)
IDEA said the less-than-ideal drop in profit was the result of foreign exchange losses -– INR152 million ($3.55 million) compared with a gain of INR329 million ($7.68 million) in the year-ago quarter -– and the expiry of a 2 percent concession it had previously been receiving on license fees in seven circles.
IDEA, which finally arranged the long-attempted acquisition of a stake in Spice during the quarter, signed up 3.19 million new subscribers for a customer base of 27.19 million at the end of June. (See India's IDEA Buys Spice for $750M.)
The merger with Spice is awaiting the approval of India's Department of Telecom, which has taken issue with the deal since license conditions prevent mergers between operators in the same circle for three years after receiving a license and state a carrier cannot hold more than a 10 percent stake in another operator in the same circle. It may be that Spice, which currently operates in the Punjab and Karnataka circles where IDEA does not, will have to give up the four additional licenses it received earlier this year. (See Indian Gov't Grants Mobile Licenses.)
— Nicole Willing, Reporter, Light Reading
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