New Delhi: In what is proving to be disastrous for the shares of India’s largest telecom service provider, Bharti Airtel Ltd, the telco announced a 31% drop in net profit to Rs1,400 crore for the fourth quarter of the fiscal 2011 as compared to the same quarter last year.
The company’s revenue, however, rose by 51% to Rs16,266 crore over the same quarter last year due to the inclusing of the now three-quarter-old Africa buy.
The telco’s share price fell more than 3% or 11 points to 358.35 at 2:30 in the afternoon on the Bombay Stock Exchange. This was at a time when the Benchmark sensex continued its downward spiral falling by almost 200 points to 18275.85.
The drop in net profit has been mainly attributed to an expensive year that has gone by with the telco making huge bets on going international as well as an increasingly aggressive roll-out of data services and 3G mobile telephony services.
Forex fluctuations also went against the telco in this quarter.
The Africa operations which became part of Airtel in June last year are expected to make losses for the firm for another few quarters but the firm is still optimistic.
“The process of rationalization of tariffs has been completed. The cost will come down as our unique business model slowly kicks in,” Manoj Kohli, head of Airtel’s International operations said.
The company also expects data to significantly improve margins.
“We have gone live in 43 cities with our 3G services and we expect to roll out in 500 towns by the end of the present fiscal,” Sanjay Kapoor, head of Airtel’s India and South Asia operations said.
Kapoor also said that the firm expected to roll-out its 4G offerings using TD-LTE by the end of the fiscal year making India one of the first countries to go 4G. “Traction is good but an eco-system, for any new technology, takes time to mature and start delivering,” Kapoor said.
The telco is also betting big on 3G and broadband in Africa. “We will be relaunching 3G services in the seven countries we have services in Africa and also launching (greenfield) 3G services in three countries -- Kenya, Congo and Sierra Leone,” Kohli said.
Mobile commerce will also be a focus for the company in Africa and Airtel is looking to launch the services in two stages of eight countries each, Kohli said.
“We would ultimately want to offer BWA services across the country,” Kapoor said in reply to the fact that the telco has BWA spectrum in only four circles.
However, the senior management is highly optimistic and is also looking at diversifying its revenue streams while reducing its cost through the creation of joint venture tower firms in Africa on the same lines as Indus Towers in India.
Indus is a joint venture between Airtel, Vodafone Essar Ltd and Idea Cellular Ltd.