SingTel – BT

Bharti outlook better as price war recedes

(NEW DELHI) The focus for Bharti Airtel will be to maintain profit margins as a vicious price war recedes, after India’s top telecoms firm reported that quarterly profits fell by a third.

Facing tough competition in a crowded home market, Bharti, an associate of Singapore Telecommunications, is betting on opportunities in Africa, where the mobile penetration level at 32 per cent is less than India’s 54 per cent and there are fewer competitors.

Bharti’s results included its new African operations, which were on its balance sheet for only 23 days in the quarter ended June. Bharti acquired the business from Kuwaiti telecoms group Zain for US$9 billion in June and became the world’s fifth-biggest mobile operator.

After call prices in India tumbled to as low as 0.4 US cents a minute – with most of the price declines taking place in the second half of 2009 – there were no big price cuts in April-June.

Bharti’s earnings before interest, taxes, depreciation and amortisation margin was 36.9 per cent in April-June, compared with 41.3 per cent a year ago.

Bharti said that net profit fell to 16.82 billion rupees (S$490 million) under international accounting standards for its first quarter ended June, from 24.75 billion rupees a year ago.

Derivatives and exchange fluctuations led to a loss of 2.16 billion rupees as the US dollar strengthened. Bharti had a forex gain of 2.79 billion rupees a year ago. Total revenue rose to 122.31 billion rupees from 104.14 billion rupees. — Reuters

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