Bharti Q2 net up 13 pc, lags forecast
Bharti Q2 net up 13 pc, lags forecast
Revenue rose 9 per cent to 98.46 billion rupees from 90.20 billion.

New Delhi: Bharti Airtel Ltd, India's top mobile operator, reported a 13 per cent rise in quarterly profit that lagged analysts' estimates as increasing number of low-paying users and competition from rivals weighed.

Bharti, whose tie-up talks with South Africa's MTN failed in September for a second time, denying it access to vast new markets and revenue streams, is facing tremendous competition at home.

"In the near-term, we are ready to face challenges posed by heightened competition," Bharti Chairman Sunil Mittal said in a statement. "We are confident of emerging winners," he added.

Four new firms, including ventures of Telenor and Etisalat are set to start operation this year and existing firms are scrambling to sign up users before then by drastically dropping call charges.

Analysts says Bharti, which has more than 23 per cent of India's 470 million-plus mobile subscribers, will be forced to match rival's prices to retain its market share but any such move would mean sacrificing revenue and earnings growth.

A new per-second billing plan from sixth-ranked Tata Teleservices helped it add more users than Bharti in the September quarter, and a move by second-ranked Reliance Communications to cut all call charges to 50 paise (US 1 cent) a minute is seen disrupting sector's growth.

Shares in Bharti, India's seventh-most valuable firm with a market value of about $25 billion, were down 0.2 per cent at Rs 311.50 by 0441 GMT, having risen as much as 3.5 per cent earlier, in a Mumbai market that had gained 1.6 per cent.

New Delhi-based Bharti, in which Southeast Asia's top phone firm SingTel owns more than 30 per cent, said net profit rose to Rs 23.21 billion ($495 million) under US accounting rules in its fiscal second-quarter ended September from 20.46 billion reported a year earlier.

Revenue rose 9 per cent to Rs 98.46 billion from 90.20 billion.

Reuters poll of 11 brokerages had forecast a net profit of Rs 24.41 billion on revenue of 103.55 billion for Bharti, which added 8.1 million mobile users in the quarter to reach a total of 110.5 million at end-September, 43 per cent higher from the year-ago quarter.

Average revenue per user fell 24 per cent to Rs 252 in the September quarter from a year earlier, as more than half of its new users came from rural areas, where customers tend to spend less than in urban areas.

Average minutes of usage fell an annual 15 per cent to 450 minutes.

EBITDA (earnings before interest, taxes, depreciation and amortisation) margin, a key gauge of profitability, was at 42.1 per cent, compared with 41 in the year-ago quarter.

Bharti shares have lost nearly a quarter in October, while second-ranked Reliance Communications is down by almost a third in the face of the price war. Bharti shares gained 4.4 per cent in the September quarter, underperforming the broader market.

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