Bharti sees comfort in price stability, new subscribers even as profit sinks

Bharti Airtel reported a 50 percent fall in quarterly profit that capped the third straight year of declining earnings at India’s top telecommunications carrier.

Bharti Airtel, the world’s fourth-biggest cellular carrier by customers, said net profit fell to Rs 509 crore or its fiscal fourth quarter to end-March, from Rs 1006 crore reported a year earlier. Analysts had expected the company to report net profit of 741 crore.

The company said net income was cut by higher net interest costs and a tax charge.

[caption id=“attachment_745875” align=“alignleft” width=“380”] The company said net income was cut by higher net interest costs and a tax charge. Reuters[/caption]

Shares in Bharti, valued at about $22 billion, traded 3.5 percent lower after the earnings announcement, underperforming the main BSE Sensex which was up 0.36 percent.

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Still, established companies such as Bharti Airtel, Vodafone Group and Idea Cellular have signed up the bulk of new subscribers in recent months as several smaller rivals have either closed or scaled back operations after a court order revoking their permits.

That emerging trend is likely to embolden the big operators to raise voice call prices and further cut discounts in a market that has not seen any meaningful price increases since a bruising price war in 2009.

“I am pleased to see that market corrections have started with improvements in the quality of customer acquisitions, and that pricing stability is returning to the sector in India,” Chairman Sunil Mittal said in a statement.

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For the fiscal year ended March Bharti, which is nearly one-third owned by Southeast Asia’s top phone carrier SingTel reported net profit of 22.76 billion rupees, its smallest annual profit in seven years.

Revenue for the March quarter rose 9.2 percent to 204.48 billion rupees, lagging estimates marginally.

Bharti also said it agreed to buy the remaining 30 percent stake in its Bangladeshi unit from Warid Group for an undisclosed amount.

Reuters