Mumbai/New Delhi: Analysts expect the country’s Top 2 telcos by subscribers, Bharti Airtel Ltd and Reliance Communications Ltd (RCom), to record a 40%-plus rise in net profit for the December quarter in which the two firms together added more than 3.5 million subscribers a month in one of the fastest growing telecom markets.
Bharti Airtel is likely to report Rs1,719.26 crore in net profit for the December quarter, a rise of 41.5% over the year-ago period, according to five analysts. RCom’s net profit could be Rs1,304.72 crore,
According to the five analysts, Bharti Airtel and RCom will see their revenues grow by 43.15% and 33.78%, respectively (see table). Telcos such as these two expand their revenue largely through their subscriber base. That’s because tariffs in India are among the lowest in the world at a minimum of around 78 paise a minute. That number is expected to halve in the coming months as competition grows.
Idea Cellular Ltd, India’s fifth biggest phone firm, which received approval from the government earlier this month to start services in nine additional licensed areas, is expected to report a more than 50% rise in revenues and a 132.65% rise in profit. Anand Rathi analyst Yogesh Kirve said, “Regional telecom companies such as Idea Cellular will find it tough as players such as RCom roll out their GSM networks across the country”.
RCom, which offers services on the CDMA technology platform has recently got the nod to offer them on the rival GSM technology too—the dominant standard in India.
Things will also be tough for firms such as Spice Communications Ltd, “which has seen its margins hovering at 24%, at a time when bigger rivals such as Bharti and RCom are reporting almost 40%”, said an analyst at a Mumbai brokerage who did not wish to be identified.