India’s Bharti Airtel profit doubles, first rise in 4 years

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India’s top mobile phone firm Bharti Airtel reported Wednesday its quarterly profit increased by 115 per cent, the first rise in four years, boosted by surging data use and easing of cut-throat price wars.

Bharti, the fourth-largest telecom firm globally, said net profit for the third financial quarter to December climbed to 6.1 billion rupees (US$98 million) from 2.84 billion rupees in the same period a year earlier.

The company’s focus on Internet operations “has increased adoption and usage” of Bharti, said Indian chief executive Gopal Vittal.

“Data is now a huge source of revenue,” Vittal added.

Data services have become the new battleground for Indian telecom companies as they seek to boost revenues in an increasingly saturated domestic mobile market.

Bharti, controlled by billionaire founder-chairman Sunil Bharti Mittal, had clocked 15 straight quarters of profit decline before Wednesday’s rise.

Despite the better performance, the figures still undershot market expectations of a 10-billion rupee profit for the three-month period.

Shares were up just 0.13 per cent at 306.55 rupees in early afternoon trade.

But analysts said the quarter was positive overall.

“Competitive intensity is declining in India thanks to (the) fruits of consolidation and the data numbers give quite a bit to be excited about,” telecom analyst Harit Shah at Mumbai’s Nirmal Securities told AFP.

The Indian firm, with 287 million customers and operations in both Africa and Asia, said Internet revenues soared 105 per cent year-on-year to 17.36 billion rupees.

Total revenues climbed 13.3 per cent in the third quarter to 219.4 billion rupees from 193.6 billion rupees a year ago.

Average revenue per user, a key industry profitability benchmark, jumped five per cent in India.

Bharti operates in 20 countries and is nearly one-third held by Singapore’s SingTel.

India’s telecom sector was a market star before fierce tariff competition pushed call rates down to among the world’s lowest.

But the number of major telecoms players has fallen, with just three firms — Bharti, Vodafone and Reliance — accounting for nearly three-quarters of revenues.

A 2012 Supreme Court ruling scrapped the licences of various smaller firms over a scandal-tainted spectrum sale.

The easing of market congestion has allowed companies to start hiking calling rates. While there is still a price battle for data customers, that have been more than offset by the volume of new customers, analysts say.

But the industry faces a new deep-pocketed rival, Reliance Jio Infocomm belonging to Reliance Industries, controlled by India’s richest tycoon Mukesh Ambani.

Bharti must bid to purchase new spectrum in an auction of mobile airwaves starting February 3 to keep providing services in several areas where it already operates.

Aggressive bidding by Reliance Industries could boost prices at the auction, at which the cash-strapped government is hoping to raise at least $1.8 billion, analysts say.

Reliance’s planned entry could force Bharti and other telecom players to invest more on capital expenditure to improve service and may even trigger a new tariff price war, analysts say.

Bharti’s Africa operations, which it purchased for $10.6 billion in 2010 to expand its global footprint, meanwhile, continue to face headwinds.

The Africa division has yet to declare a profit and it added 36 percent fewer customers during the third quarter from a year earlier, the earnings statement showed.

Source : Channel News Asia | January 29, 2014
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About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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