Bharti Airtel net zooms 37 pc | india | Hindustan Times
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Bharti Airtel net zooms 37 pc

india Updated: Apr 26, 2008 00:01 IST
Archana Khatri
Archana Khatri
Hindustan Times
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Mobile telephone service industry leader Bharti Airtel Ltd reported a 37 per cent year-on-year jump in its fourth-quarter net profit on Friday as it announced a $3.4 billion (nearly Rs.14,000 crore) capital expenditure plan in the new fiscal year that started this month to consolidate its hold over an industry in which competition is mounting with new players galone.

The company’s shares ended 9.61 per cent higher in a modest market on the results, backed by speculation that Bharti was ready to acquire South African operator MTN, but the company managing director Akhil Gupta quickly dismissed a story in UK’s Financial Times as “absolutely wrong.”

Chairman Sunil Bharti Mittal described the speculation as unwarranted while MTN also said there was nothing concrete to report.

“From our point of view we look at any opportunity that comes to us. At the moment there is nothing that we can repor,” he said while the company’s share soared to 941.90 rupees from the previous close of Rs. 844.20 to settle at 925.3, up 9.6 per cent.

The results gave strong momentum to Bharti, which reported a net profit of Rs. 1,853 crore in the January-March quarter, while its consolidated revenue rose 45 per cent to Rs. 7,819 crore. For 2007/08 as a whole, Bharti’s net profit rose 57 per cent to Rs. 6,710 crore while revenues rose 46 per cent to Rs. 27,025 crore from the previous fiscal.

The company has been expanding its network across rural areas and added 2.5 crore subscribers in 2007-08 taking the overall subscriber base to cross 6.4 crore. In the fourth quarter alone, the company added nearly 69.27 lakh customers. But its average revenue per user has been dipping. Average revenue per user fell to Rs 357 in the March quarter from Rs 406 in the previous year, although the minutes of usage grew 7 per cent.

“Competition intensity will go up, but we will continue gaining market share”, Manoj Kohli, President and CEO of Bharti Airtel, told HT .

As many as 16 companies have signed licence agreements this year to start services, even as regional players are planning to national while CDMA-based players like Reliance and Tata Indicom are set to enter Bharti’s GSM operation in which Vodafone is a key rival.

Kohli believes new entrants will take about a year to settle as Airtel builds on its market lead with capital expenditure. “The investment will be directed towards adding more capacity in urban areas while adding coverage in rural India,” he said.

Value-added services like mobile commerce and music downloads are expected to add to profit margins in large metros for Bharti in an industry where pre-paid recharge vouchers and affordable rates are powering volume growth in less affluent areas and rural zones.