Bharti Airtel, India's top mobile company, reported on Friday its net
quarterly profit plunged by an unexpected 72 percent, hit by punishing
price competition and a surge in interest charges.
The profit drop to
2.84 billion rupees in the three months to December marked the telecom
giant's 12th straight quarterly fall and far undershot analysts'
forecasts of an eight-billion-rupee profit.
have been challenging in recent quarters due to pricing pressures and
rising input costs," Bharti's billionaire founder and chairman Sunil
Bharti Mittal said.
These have "put enormous pressure on the sector and consequently margins" he added.
which has 262 million clients globally and is the world's
fourth-largest mobile operator by customers, posted a profit of 10.1
billion rupees in the same quarter last year.
"There are still big
headwinds, it's not clear sailing yet by any means," said Harit Shah,
an analyst with Mumbai-based Nirmal Bang Institutional Equities, who has
a "sell" recommendation on Bharti shares.
Bharti's shares slid by
nearly four percent before recovering to trade down nearly two percent
at 333.05 rupees at mid-afternoon.
The telecom sector was once a
market star but price wars which have pushed call rates to among the
world's lowest have taken off the shine.
Even though the number of
major telecom companies has fallen to seven from over a dozen, due to a
Supreme Court ruling scrapping licences of some smallar firms, rivalry
Weighing on earnings were interest costs which
soared 69 percent from a year earlier due to debt from purchasing faster
3G spectrum and the African mobile operations of Kuwait's Zain in 2010.
Africa operations, which it bought for $10.6 billion to extend its
global footprint and "serve as a shining example" of cooperation between
South Asia and Africa, are still losing money.
The group must
also pay nearly $1 billion to cover government demands for operators to
pay surcharges on their airwaves and has to purchase additional
broadband in a March auction to meet growing demand.
exchange losses on the back of a weaker rupee ballooned to 2.48 billion
rupees, swinging from a gain of 132 million rupees a year earlier.
called the figures disappointing. The result "was much below
expectations," said Mumbai-based Angel Broking telecoms analyst Ankita
But revenues in the third quarter grew by 9.5 percent to
202.39 billion rupees from the same year-earlier period in line with
market expectations led by strong growth in mobile Internet services, a
company statement said.
The worst "seems to be getting over" with
rates improving and on "the data front, it is heartening to see strong
growth quarter-on-quarter", Mittal added.
Bharti, one-third held by Singapore's SingTel, withdrew some discounts on voice calls last month to boost its performance.
boom in phone connections has been overwhelmingly driven by cellular
services and the country is second only to China with 900 million