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Mobile boom to boost Bharti, Reliance profit

Mobile boom to boost Bharti, Reliance profit
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First Published: Tue, Oct 30 2007. 11 21 PM IST

Updated: Tue, Oct 30 2007. 11 21 PM IST
Mumbai: India’s top mobile firms, Bharti Airtel Ltd and Reliance Communications Ltd, should report quarterly profit jumped by more than two- thirds as they rode booming demand in the world’s fastest-growing mobile market when they report their results for the quarter ended September on Wednesday.
Declining tariffs, cheaper handsets and the expansion of networks to smaller towns and rural areas boosted the number of India’s wireless subscribers by 23.9 million to more than 209 million in the September quarter, up 61% from a year earlier.
Analysts expect the growth momentum to continue as just over 19% of India’s more than a billion people have a mobile phone.
Lehman Brothers estimates mobile subscriber growth to average seven-eight million a month in the next 12 months.
“The opportunity looks great. By 2010, (operators) are trying to reach 500 million subscribers,” said T.R. Madan Mohan, director of consulting, information and communications technology practice at global research firm Frost & Sullivan.
“The large part of that growth will be driven by mobile and will come from the rural areas. So the biggest challenge is how they go there and grow using appropriate technologies.”
Analysts said a spate of applications for new telecom licences, including from global majors such as AT&T and new firms with no experience in telecoms, would intensify competition in the market, which already has 12 players.
“Some of them will try to provide low cost, low value- added services, which is not sustainable,” Mohan said. “We expect a lot more consolidation to happen in couple of years.”
Bharti, which added 6.2 million mobile customers in the quarter to lift its total to 48.9 million, should report on Wednesday net profit jumped 66.5% to Rs1,555 crore ($395 million) from Rs934 crore reported a year earlier, a Reuters poll of 12 analysts showed.
Reliance, which had 36.3 million mobile customers at end-September, is expected to report a 75% surge in quarterly net profit to Rs1,228 crore, it showed.
No. 6 operator Idea Cellular Ltd last week reported its quarterly profit doubled to Rs220 crore.
The net profit forecast for Reliance does not include capital gains from a 5% stake it sold in its mobile phone tower unit for $355 million.
The sale had valued Reliance’s tower business at $6.75 billion and spurred analysts to mark up valuations of Bharti’s tower unit, with some saying it was worth $10 billion or more.
Shares in Bharti, India’s fourth most valuable company at more than $49 billion, rose 12.6% in the September quarter, underperforming an 18% rise in the benchmark index. Reliance rose 13.3% in the quarter.
Vodafone Essar, controlled by Vodafone, and state-run Bharat Sanchar Nigam Ltd are India’s No. 3 and No. 4 mobile operators, respectively. Neither of the firms are listed.
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First Published: Tue, Oct 30 2007. 11 21 PM IST
More Topics: Mobile | Bharti | Reliance | Profit | Market |