By Saikat Chatterjee and Catherine Yang, Bloomberg
New Delhi: Bharti Airtel Ltd., India’s biggest mobile-phone service provider, doesn’t plan to cut phone tariffs this year, CEO Manoj Kohli said.
Bharti, 30.8 % owned by Singapore Telecommunications Ltd., plans to spend as much as $3.5 billion in the year to 31 March to take advantage of the growth opportunity in India, the world’s fastest-growing mobile-phone market.
“Frankly, our competition may get more desperate to do so, but we are really not planning any price reduction this year,” Kohli said in an interview today. “We believe prices are already very affordable. However, there are 20-25 % of government levies and taxes which we are speaking with the government to reduce.”
Finance Minister Palaniappan Chidambaram said on 28 February, while presenting the budget for the year starting 1 April, that he plans to rationalize taxes for the telecommunications sector.
“As soon as that happens, we’ll pass on the benefit to customers and I believe that will help prices become more affordable,” Kohli added.
New Delhi-based Bharti said on 27 April that net income climbed to Rs13.53 billion ($327 million) in the three months ended 31March from Rs6.82 billion a year earlier, beating the 12.31 billion rupee median estimate of 14 analysts surveyed by Bloomberg News. It was the 12th straight quarter of record profit for India’s most valuable mobile carrier, which has a market capitalization of almost $38 billion.
Sales gained 58 % to Rs53.93 billion, falling short of the Rs55.6 billion estimate.
Kohli defended the almost 66 % jump in planned capacity expansion, saying it was needed to maintain growth momentum.
“We believe this is a viable investment and it will really pay back sooner than we expect. Not only is the market growing, we are adding to our market share,” Kohli said. “We are putting money behind growth. Our strategy is clearly growth led and the mobile market is growing at 6 to 7 million new users a month.”