Bharti sees 2G net profit drop on tariff cuts

10 Nov 2010

India’s Bharti Airtel has posted a 27% year-on-year decline in net profit on the back of reducing calling rates across a number of its new African subsidiaries as its looks to boost its market share in the region. For the three months ended 30 September 2010, the first full quarter since incorporating the 15 units it acquired from Zain in June 2010, Bharti posted a net income of INR16.6 billion (USD374 million), down from INR22.6 billion a year earlier. Turnover, however, surged by 47% compared to the same period a year earlier, standing at INR152.2 billion, with the company’s African units accounting for 26% of group turnover in Bharti’s second fiscal quarter of the 2010/11 year, up from the 8% they contributed in the previous quarter. Group earnings before interest, tax, depreciation and amortisation (EBITDA) meanwhile were INR51.2 billion, up 19.1% year-on-year.

With reference to the company’s new operations, Bharti Africa’s CEO Manoj Kohli was quoted by Bloomberg as saying: ‘We’ve modified our tariffs in ten markets of 16 … In some markets, we had an unsustainable premium of 30% to 40%.’ The executive also confirmed that Bharti expects to invest around USD1.2 billion in expanding operations in Nigeria, Gabon, Zambia, Malawi, Niger and Uganda over the coming three years. Closer to home, continued hyper-competition in the Indian wireless sector saw Bharti reveal that average revenue per user (ARPU) had slumped by more than 20% year-on-year to INR202, as call rates continued to fall.

In operational terms, despite the high levels of competition in its domestic market Bharti reported a 29.7% annual increase in customer numbers, finishing the quarter with 143.29 million subscribers. The company’s other Asian subsidiaries in Bangladesh and Sri Lanka had a combined customer base of around 4.33 million, while African subscribers across all 16 of the company’s units numbered 40.1 million, up 10% against the end of the previous quarter.

Sunil Bharti Mittal, Bharti’s chairman and managing director, said of the company’s current status : ‘Bharti Airtel continues to maintain its leadership position in India and generate healthy free cash flow. Our 3G services will be available across India, starting with launches in the current quarter. We are also redefining the accessibility and affordability levels across Africa through innovative business models. With the imminent launch of the Airtel brand in Africa, the customers will experience the power of a unified brand across our 19 countries.’

India, Bharti Airtel