Bharti Q4 net jumps; growth worries remain

Bharti Q4 net jumps; growth worries remain
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First Published: Wed, Apr 29 2009. 05 48 PM IST
Updated: Wed, Apr 29 2009. 05 48 PM IST
New Delhi: Bharti Airtel Ltd, India’s top mobile operator, increased quarterly profit by 21% as it added more users and held tariffs steady even as rivals cut prices, but growth concerns weighed on its stock.
The company, about 31% owned by Southeast Asia’s top phone firm SingTel, announced its maiden dividend and a two-for-one stock split, but its shares underperformed the broader market after jumping initially.
Cheaper call tariffs and expanding networks have helped Indian mobile operators add subscribers at a furious pace, making the country the world’s fastest growing wireless market.
Operators signed up 130 million subscribers -- more than the population of Japan -- in the year to end-March, including a record 44.5 million in the March quarter.
“I am expecting more or less stagnant growth going forward,” said Naveen Kulkarni, an analyst at MF Global in Mumbai.
“Revenue will continue to grow, but in a competitive landscape and when costs are not going to come down significantly, I am not really expecting a huge growth in profit after tax.”
Besides cut-throat competition, firms have invested heavily to expand networks to tap the vast rural population. While that boosts the number of users, rural customers tend to spend less than urban subscribers.
Bharti has stayed away from a tariff war that helped closest rival Reliance Communications added a record 11.3 million users in the quarter, more than Bharti’s 8.3 million.
“The good news is really on the revenue market share,” Bharti Airtel deputy CEO Sanjay Kapoor told a news conference.
Bharti has nearly 94 million subscribers, who account for 24% of the sector’s customers but 32% of revenue.
Still, average revenue per user fell 15% to Rs305 in the quarter as it won more new users in rural areas, where users talk less on phones and some use mobiles just to answer calls. Minutes of usage fell 4% to 485 minutes.
Some fund managers said the sector’s strong subscriber addition was key to profitability.
“While the subscriber base continues to rise, I don’t see pressure on the profitability of the big telecom companies like Bharti,” said KK Mital, head of portfolio management services at Globe Capital, which has Bharti in its portfolio.
Management Stays Optimistic
Bharti said its net profit in January-March, its fiscal fourth quarter, rose to Rs2,239 billion ($446 million) under US accounting standards from Rs1,852 crore a year ago. Revenue rose 26% to Rs9,825 crore. A Reuters poll of 12 brokerages had forecast net profit of Rs2,210 crore on revenue of Rs10,146 crore.
“I am sure we will be able to outpace our performance,” said Manoj Kohli, chief executive officer of Bharti Airtel.
By 0810 GMT, Bharti’ shares were up 0.4%, after having risen as much as 3.5% after the results.
Reliance Communications reports results on Thursday and analysts polled by Reuters expect a fall in earnings.
Bharti has posted robust earnings in the past six years but has not paid dividends as it invested in building a national footprint. It spun off its telecom towers unit last year, which helped it generate cash in the year to March 2009.
Bharti plans to spend about $3 billion in capital expenditure this fiscal year, down 14% from last year, director Akhil Gupta said.
Bharti, whose overtures to South Africa’s MTN to create a global top-10 telecoms firm failed last year, was still looking for overseas expansion through acquisitions, he said.
“We will keep looking for opportunities, but whether there is anything in the pipeline, no.”
EBITDA margin, a key gauge of profitability, declined marginally to 40.7% in January-March but Gupta expects the margins to remain at current levels.
Bharti shares fell 13% last quarter, underperforming a 0.6% rise in the broader market .
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First Published: Wed, Apr 29 2009. 05 48 PM IST
More Topics: Company results | Bharti Airtel | Profit | Q4 | Telecom |