UPDATE 1-India's Bharti Airtel profit sinks, misses estimates

Fri Feb 1, 2013 11:23am IST

Stocks

   

* Q3 net profit 2.84 bln rupees vs est 8.45 bln

* Finance costs rise 69 pct to 13.32 bln rupees

* Shares fall as much as 3.8 pct after results (Adds details, quotes, byline)

By Devidutta Tripathy

NEW DELHI, Feb 1 (Reuters) - Profit at India's top mobile network operator Bharti Airtel Ltd 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 I/B/E/S.

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.

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.

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 Ltd owns almost a third of the firm. ($1 = 53.1900 Indian rupees) (Reporting by Devidutta Tripathy, additional reporting by Aradhana Aravindan in MUMBAI and Reshma Apte in BANGALORE; Editing by Daniel Magnowski)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Economic Pulse

REUTERS SHOWCASE

NSEL Fraud

NSEL Fraud

Govt orders Financial Tech to absorb NSEL, liabilities  Full Article 

Stalemate

Stalemate

WTO prepares for crisis talks as India keeps veto on global deal.  Full Article 

Deal Talk

Deal Talk

Smartphone repair company B2X steps up expansion with Indian deal.  Full Article 

Earnings Season

Earnings Season

HDFC Bank eyes pickup in corporate credit.  Full Article 

JLR China

JLR China

JLR sees 20 percent growth in China sales this year - exec  Full Article 

Iron Ore Imports

Iron Ore Imports

JSW Steel to boost iron ore imports by up to 80 percent.  Full Article 

Pollution Levels

Pollution Levels

Delhi braces for worst air quality this Diwali week.  Full Article 

Remembering Margerie

Remembering Margerie

Total’s "Big Moustache"- bon vivant, deal-maker and risk-taker .  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage