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[January 29, 2014]
India's Bharti Airtel profit doubles, but Africa business struggles [Africa Review]
(Africa Review Via Acquire Media NewsEdge) India's top mobile phone firm Bharti Airtel said Wednesday its quarterly profit leapt by 115 per cent, the first rise in four years, boosted by surging data use and an easing of price wars.
Bharti, the fourth-largest telecom firm globally, said net profit for the third financial quarter to December climbed to 6.1 billion rupees ($98 million) from 2.84 billion rupees in the same period a year earlier.
The company's focus on Internet operations "has increased adoption and usage" of Bharti, said Indian chief executive Gopal Vittal.
"Data is now a huge source of revenue," Mr Vittal added.
Data services have become the new battleground for Indian telecom companies as they try to boost revenues in an increasingly saturated domestic mobile market.
Bharti, controlled by billionaire founder-chairman Sunil Bharti Mittal, had clocked 15 straight quarters of profit decline before Wednesday's rise.
The figures still undershot market expectations of a 10-billion rupee profit for the three-month period but analysts said the quarter was positive overall.
"Competitive intensity is declining in India thanks to (the) fruits of consolidation and the data numbers give quite a bit to be excited about," telecom analyst Harit Shah at Mumbai's Nirmal Securities told AFP.
The Indian firm, with 287 million customers and operations in both Africa and Asia, said Internet revenue soared 105 per cent year-on-year to 17.36 billion rupees.
Total revenue climbed 13.3 percent in the third quarter to 219.4 billion rupees from 193.6 billion rupees a year earlier.
Average revenue per user, a key industry profitability benchmark, jumped five per cent in India.
Fierce competition Bharti operates in 20 countries and is nearly one-third held by Singapore's SingTel.
India's telecom sector was a market star before fierce tariff competition pushed call rates down to among the world's lowest.
But the number of major telecoms players has fallen, with just three firms -- Bharti, Vodafone and Reliance -- accounting for nearly three-quarters of revenues.
A 2012 Supreme Court ruling scrapped the licences of various smaller firms over a scandal-tainted spectrum sale.
The easing of market congestion has allowed companies to start raising calling rates. While there is still a price battle for data customers, that has been more than offset by the volume of new customers, analysts say.
But the industry faces a new deep-pocketed rival, Reliance Jio Infocomm belonging to Reliance Industries which is controlled by India's richest tycoon Mukesh Ambani.
Bharti must bid to purchase new spectrum in an auction of mobile airwaves starting February 3 to keep providing services in several areas where it already operates.
New tariff war Aggressive bidding by Reliance Industries could boost prices at the auction, at which the cash-strapped government is hoping to raise at least $1.8 billion, analysts say.
Reliance's planned entry could force Bharti and other telecom players to raise capital expenditure to improve services and may even trigger a new tariff price war, analysts say.
After gaining, Bharti shares reversed gear to close down 1.52 percent at 301.65 rupees as sentiment was knocked by an Economic Times report that the company could face a 10-billion-rupee tax bill over transfer of telecom tower assets in an infrastructure-sharing joint venture.
A Bharti spokesman called the report "frivolous" and told AFP the telecom giant has always followed the "highest tax compliance standards".
Bharti's Africa operations, which it purchased for $10.6 billion in 2010 to expand its global footprint, meanwhile, continue to face headwinds.
The Africa division has yet to declare a profit and it added 36 percent fewer customers during the third quarter compared to a year earlier.
-AFP- (c) 2014 Nation Media Group. All rights reserved. Provided by Syndigate.info, an Albawaba.com company
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