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Bharti sees India mobile recovery, shakeout

Top Indian mobile phone operator Bharti Airtel expects call prices to stabilise after sharp falls, and a recovery in usage sets an encouraging trend, the company's South Asia chief said on Tuesday.

business Updated: May 11, 2010 20:49 IST

Top Indian mobile phone operator Bharti Airtel expects call prices to stabilise after sharp falls, and a recovery in usage sets an encouraging trend, the company's South Asia chief said on Tuesday.

Sanjay Kapoor, who took over in March as the company's CEO for India and South Asia, told Reuters that consolidation in the fiercely competitive Indian mobile phone market was inevitable, and said aggressive bids in the ongoing 3G spectrum auctions could prevent winners from offering inexpensive service.

He said in an interview there was room for five or six carriers in India, compared with 15 now.

Consolidation in the market may have received a boost on Tuesday when India's telecoms regulator recommended ending restrictions on companies selling out, a move that could help pave the way for dealmaking in the sector.

Bharti, 32 percent owned by Southeast Asia's top carrier, Singapore Telecommunications, last month reported its first profit drop in three years. March quarter earnings were hit by a margin-crushing price war among operators in their bid to add more customers.

"The resurgence of traffic and the resurgence of revenue earning customers during the last quarter is delightful," said Kapoor.

"It has set a good recovery trend in hyper competition," he said when asked about the outlook for the company.

Bharti, the largest operator in the world's fastest-growing mobile market, saw total minutes carried on its network growing 12 percent from the previous quarter, while average usage per user bounced back after falling for six quarters.

Mobile call prices in India have more than halved in recent months to as low as 0.4 US cents a minute after a price war broke out last year.

Bharti rivals such as Telenor and Reliance Communications recently launched cheaper call plans in the latest salvos of the ongoing tariff war.

In March, Bharti struck a $9 billion deal to buy telecoms operations in 15 African countries from Kuwait's Zain, and expects to become the world's No. 5 mobile firm after closing the deal, an overseas push that analysts say was prompted in part by fierce competition and shrinking margins at home.

Bharti also operates in Sri Lanka and Bangladesh.

Hyper Competition

Kapoor said current prices for most operators are not sustainable and expected the pace of decline in call charges to start slowing.

"It's been just a couple of quarters that we have seen this hyper competition because there are heavyweights who have put in money behind these services," he said.
"But in an industry which does not have a sustainable business model, it's a matter of time before both the investors and shareholders start asking: 'Where are you throwing my money?'"

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