Bharti net dips 28%; warns on regulatory minefield
After posting a decline in profit for the ninth quarter in a row, India’s largest telecom service provider, Bharti Airtel, is faced with more problems in 2012-13: it may have to pay for excess spectrum that it holds.india Updated: May 02, 2012 23:12 IST
After posting a decline in profit for the ninth quarter in a row, India’s largest telecom service provider, Bharti Airtel, is faced with more problems in 2012-13: it may have to pay for excess spectrum that it holds.
The exact amount they will have to pay depends on the figures that auction of spectrum garners. If the recommendations of the Telecom Regulatory Authority of India (TRAI) are any indication, this may be substantial, in billions of dollars.
Announcing the quarterly financials on Wednesday, Bharti attributed the decline in profits to higher costs on account of 3G licence fee amortisation (Rs 106 crore), 3G interest cost (Rs 84 crore), forex fluctuation losses (Rs 132 crore) and tax provisions (Rs 198 crore).
If the government does accept the TRAI recommendation on re-farming of spectrum, Bharti Airtel, which was issued spectrum in 900 MHz band in many circles including Delhi, will be in a financial quandary.
In the long term, though, it is likely to gain as the regulator has proposed reducing spectrum usage charges from up to 8% to 1% per annum.
In a statement issued on Wednesday, Sunil Bharti Mittal, CMD of Bharti Airtel, said: “…The recent regulatory developments in India will have significant implications on the future of telephony and broadband, as well as India's global competitiveness. The entire industry looks to the government for a fair, transparent and sustainable telecom regime.”