Bharti Airtel, India’s top mobile phone carrier, on Wednesday reported a bigger-than-expected 28% fall in quarterly profit, hit by losses at its African operations and as costs of its new third-generation network in India weighed.
Shares in Bharti fell more than 4% after the results to their lowest level in more than a week.
India’s long-suffering telecoms sector is back on investors’ radar after companies including Bharti raised call prices recently -- the first such increase in at least two years -- after a vicious price war in the 15-player market had strained their finances.
With more than 850 million mobile connections, India is the world’s second-biggest mobile phone market after China and is adding subscribers at the fastest pace. The market, however, offers some of the world’s cheapest call rates as carriers have traditionally sacrificed profits to chase growth.
Bharti last year ventured into Africa at a time when growth on its home turf was slowing by acquiring most of the mobile African mobile operations of Kuwait’s Zain to become the world’s fifth-biggest mobile carrier by subscribers.
But high costs in Africa have kept the firm’s margins under pressure and it has yet to turn a profit there, although company officials have said the African business is improving.
The company’s overall Africa related net loss in the June quarter was at Rs302 crore.
Bharti, which spent $3.5 billion in an Indian state auction last year to buy 3G and broadband airwaves, is betting on a pick up in premium data services to boost margins in a market where voice calls account for more than 85% of the sector’s revenue.
“In India, the company’s efforts in the area of cost efficiencies have helped arrest the margin decline,” Bharti Airtel chairman Sunil Mittal said in a statement.
“Overall, 2011-12 promises to be an exciting year of transformation.”
New Delhi-based Bharti, nearly a third owned by Southeast Asia’s biggest phone firm, SingTel , said consolidated net profit fell to Rs1,215 crore ($274 million) for its fiscal first quarter ended June from Rs1,682 crore a year earlier, based on international accounting standards.
It was the sixth consecutive quarter of falling profits for the New Delhi-based firm that had 221.2 million mobile users at the end of June in 19 countries across Asia and Africa.
Revenue rose 39% to Rs16,975 crore. A Reuters poll of brokerages had expected net profit of Rs1,518 crore on revenue of Rs16,887 crore.
Monthly average revenue per user (ARPU), a key metric for telecom carriers, from Bharti’s Indian operations fell an annual 12% to Rs190 for the quarter. Africa ARPU saw a drop of 2% on year to $7.3.
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