A price war with new entrants and expenses linked to overseas acquisitions have caused a fall in the net profit of Bharti Airtel, India’s largest telecom service provider.
Bharti on Wednesday posted a fall of 8 per cent in the net income to Rs 2055 crore for its fourth quarter ended March from the year-ago period.
The company is facing pressure on both its revenues and profits for last one year due to the entry of new GSM players including Tata Teleservices and RCOM. However, the company attributes the profit decline to the extraordinary expenses related to overseas acquisitions.
As it consolidated its lead, Bharti’s revenues crossed the Rs 10,000 crore milestone and saw revenues inch up 2 per cent after two quarters that saw revenues dipping. Revenues appeared to be stabilising after a rush of competition put the giant’s back to the wall.
Sunil Bharti Mittal, chairman and managing director said Bharti was strong despite “hyper competition.”
“We are confident of repeating our success story in Sri Lanka and Bangladesh by winning the hearts of customers,” he said.
For 2009-10 as a whole, Bharti’s revenues grew 7 per cent year-on-year to Rs 39,615 crore. Its net profit also went up by 7 per cent to Rs 9,103 crore.
The total subscriber base went up by 41 per cent in 2009-10 to 13.75 crore at the end of March, 2010 The company added 8.8 million subscribers in Q4. Bharti’s operating expenses also rose 20 per cent year-on-year to Rs 4,107 crore as network costs hit home.
Average revenue per user (ARPU) fell by about 28 per cent to Rs 220 in the quarter ended March, 2010 dragged down by low-use customers in rural areas.
Bharti Airtel’s joint managing director Akhil Gupta said that the company will spend up to $ 800 million (about Rs 3,565 crore) this fiscal on setting up infrastructure network for its new acquisition Zain Africa.”
The acquisition has given give a huge African market for Bharti.