October 25, 2016 / 1:07 PM / 3 years ago

Bharti Airtel Q2 net declines on higher costs, Jio weighs on mobile business

MUMBAI (Reuters) - India’s top telecoms network operator Bharti Airtel Ltd reported a drop in second-quarter profit due to higher costs and said competition from a new carrier led to slow growth in the mobile business.

An employee works at a billing counter inside a Bharti Airtel store in New Delhi, India April 20, 2016. REUTERS/Adnan Abidi/File Photo

Wireless carriers such as Airtel are boosting capacities and spending billions of dollars to offer high-speed data services to users in India, the world’s fastest-growing internet services market.

Bharti, in fact, bought $2.13 billion worth of airwaves in an auction earlier this month as competition from Jio, the telecoms unit of India’s richest man Mukesh Ambani’s Reliance Industries Ltd, spurred a price war among operators to retain customers.

The company said its consolidated net profit declined to 14.61 billion rupees ($218.59 million) for the three months to Sept. 30 from 15.36 billion a year earlier.

Analysts had expected the wireless operator to report a profit of 13.69 billion rupees, according to Thomson Reuters data.

Revenue rose 3.4 percent to 246.72 billion rupees, while costs of depreciation on capital expenditure and airwaves amortization expenses increased nearly 17 percent to 49.56 billion rupees. Higher interest payments weighed.

Jio’s offering of free voice and data services to customers till Dec. 31 also hurt.

The company’s “mobile business has experienced a slowdown in growth due to free services being offered by a new operator”, Gopal Vittal, managing director and chief executive for India and South Asia, said in a statement.

Bharti’s revenue fell 3.5 percent on a sequential basis due to cheaper voice and data tariffs.

Average revenue per user for voice services declined 5 percent on a sequential basis to 132 rupees.

Losses from Africa operations narrowed to 6.10 billion rupees from 11.03 billion rupees due to divestment of units and sale of tower assets.

Bharti Airtel shares ended 1.7 percent higher ahead of results in a broader Mumbai market that fell slightly.

($1 = 66.8377 Indian rupees)

Reporting by Sankalp Phartiyal; Editing by Kenneth Maxwell and Susan Thomas

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