GO
Loading...

India's Bharti Airtel Profit Sinks, Misses Estimates

Friday, 1 Feb 2013 | 2:10 AM ET

Profit at India's top mobile network operator Bharti Airtel fell for the twelfth successive quarter, with higher costs dragging its results well below market expectations.

Bharti Airtel, controlled by billionaire Sunil Mittal, said consolidated net profit fell to 2.84 billion rupees ($53.39 million) in the fiscal third quarter that ended Dec. 31, from 10.11 billion rupees a year earlier.

Revenue rose 9.5 percent to 202.4 billion rupees, but the company was hit by foreign exchange losses, higher taxes and financing costs. Analysts had expected the company to report net profit of 8.45 billion rupees on revenue of 202.79 billion rupees, according to Thomson Reuters.

(Read More: India's Bharti Infratel Shares Slump in Debut After $760 Million IPO)

Shares in the company, valued at $24 billion, were down 2 percent at 0500 GMT, while the broader market was slightly up.

"Market conditions have been challenging in recent quarters due to pricing pressures and rising input costs, which have put enormous pressure on the sector and consequently the margins," Chairman Sunil Mittal said in a statement.

"However, the worst seems to be getting over, with corrections taking place in customer acquisition practices and the tariffs", he said.

For years, stiff competition in a crowded market has limited Indian telecoms companies' ability to raise prices. The outlook for bigger firms including Bharti Airtel has improved since an early 2012 court order to revoke permits of several operators, signalling the exit of some smaller companies from the market.

(Read More: (India Cuts Rates for First Time in Nine Months)

Bharti Airtel and Idea Cellular, India's No. 3 mobile carrier by revenue, recently raised call prices by withdrawing discounts. This week Idea reported a smaller-than-expected increase in quarterly profit as higher network operating costs ate into margins.

New Spectrum Needed

The government wants established operators to pay surcharges on their airwaves, which will mean a bill of almost $1 billion for Bharti, the country's No.1 operator by both revenue and number of subscribers, which also needs to buy new spectrum in an auction due in March.

In 2010, it ventured into 15 African countries, buying mobile assets there for $9 billion. It has yet to turn around the money-losing African businesses.

(Read More: India Rate Cut Has Got Consumers Excited)

Finance costs for Bharti Airtel rose 69 percent during the December quarter to 13.32 billion rupees from a year earlier, and income tax expense rose 20 percent.

The company also recorded a forex loss of 2.48 billion rupees compared with a gain of 132 million rupees a year earlier Monthly average revenue per user, a key metric for telecoms carriers, rose 4 percent from the previous quarter to 185 rupees for its Indian operations.

Singapore's SingTel owns almost a third of the firm.

Featured

Contact Mobile

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More
  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.