Bharti cuts Q3 loss, shares soar

MUMBAI: Bharti Tele-Ventures Ltd has revealed that its quarterly loss has dropped by 83 percent, causing its shares to zoom.

Bharti’s subscribers jumped to 3.09 million at the end of December, up 21 percent from the preceding quarter and 148 percent from a year earlier. Bharti rolled out mobile services to nine new districts in the current year, expanded fixed-line phone services to five districts from one. It also launched its national and long-distance phone service, along with group data and broadband operations.

That helped narrow the consolidated net loss to 70.7 million rupees ($1.47 million) in the third quarter, ended December, from 417.5 million a year earlier, boosting its shares more than 15 percent to 25 rupees in a flat BSE.

Total income for the October-December quarter doubled to 8.5 billion rupees from 4.2 billion.

"The numbers have come as a surprise to us," said Srinivas Rao Ravuri, a telecom analyst with Edelweiss Capital. "It is the result of aggressively managing costs."

Bharti said growth of long distance traffic on India's mobile networks had also helped.

Stiff competition has pushed long-distance telecoms rates sharply lower over the past year, encouraging people to use mobile phones for long-distance calls. Bharti's customers account for 26.5 percent of Indian mobile users.

The company said its 2.4 billion rupee operating profit for the past quarter was 93 percent higher than a year earlier and 98 percent more than in the preceding quarter.

"The improvement in profitability was the result of increasing revenue and controlled costs which ensured that most of the incremental revenue was translated into EBITDA (operating profit)," the company statement said.

The average customer spent 224 minutes a month on the phone, eight percent more than in the previous quarter, but analysts noted that usage tended to be higher in October-December, a festival period.

Bharti's main rivals in the Indian market include Hutchison Whampoa Ltd's <0013.HK> Indian unit and unlisted Idea Cellular, which is owned jointly by U.S. giant AT&T Wireless Services Inc , India's Tata group and the Birla conglomerate. Two large state-owned firms also compete in the market.

Other rivals are overseas-service and Internet provider Videsh Sanchar Nigam Ltd and state-run Mahanagar Telephone Nigam Ltd , a fixed line phone provider in two market districts where it also offers so-called limited-mobility services, which connect phones in only small areas.

SUSTAINABILITY

"The results are good and the stock may see an upside in the near term, but sustainabilty of Bharti's performance will depend on other things, like customer response to Reliance's service and the resolution of the interconnect row," said Priya Rohira, analyst with Birla Sun Life Securities.

Reliance Infocomm, a unit of India's powerful Reliance group , last month announced a cheap limited mobility service, which sparked a round of rate cuts in the industry.

Indian mobile and fixed-line firms are also in the midst of a row over interconnect facilities.

The cellular sector refused last week to implement an order from the telecoms regulator to offer interconnect services to limited-mobility services provided by fixed-line firms, both state-run and private.

India's Communications Minister Pramod Mahajan said on Monday a truce had been called between the cellular and fixed-line operators.

Cellular firms say the access charges for such interconnections discriminated against them. They also oppose the government policy of allowing fixed-line service providers to offer limited mobility.

($1 = 47.9 rupees)

© Reuters