High expenses bring Airtel net down by 38 p.c.

NEW DELHI: India's top mobile phone carrier Bharti Airtel on Friday reported a bigger-than-expected 38 per cent fall in fiscal second-quarter profit, its seventh straight quarterly profit drop, hit by higher interest costs and foreign exchange losses.

Bharti, nearly a third owned by Southeast Asia's biggest phone firm SingTel, said consolidated net profit fell to Rs 1,027 crore ($210 million) for its fiscal second quarter ended September from Rs 1,661 crore a year earlier, based on international accounting standards.

Bharti, which last year acquired mobile operations in 15 African countries in a $9 billion debt-funded deal, said consolidated revenue rose to Rs 17,276 crore from Rs 15,231 crore in the year-ago quarter.

The net profit was hurt by higher interest expenses that trebled from a year earlier to Rs 1,118 crore for the September quarter.

Currency fluctuations led to foreign exchange losses of Rs 239 crore for the quarter versus profit of Rs 249 crore in the year ago quarter.

Bharti also took on debt to pay more than $3 billion for 3G and broadband spectrum in a state auction last year.

Monthly average revenue per user (ARPU), a key metric for telecom carriers, from Bharti's Indian operations fell an annual 9 per cent to Rs 183 for the quarter, while Africa ARPU fell 1 per cent to $7.3.

At 10.28am, shares in Bharti were trading up 0.7 per cent at Rs 395.30 on the BSE. The stock, valued at $30.4 billion, are up 9.6 percent this year, outperforming a nearly 14 percent fall in the broader market.

Bharti Airtel, is not averse to mergers and acquisitions in India, Sanjay Kapoor, its chief executive for India and South Asia said.

Bharti last year ventured into Africa by acquiring most of the African mobile operations of Kuwait's Zain in a $9 billion debt-funded deal and became the world's fifth-biggest mobile carrier by subscribers.

But high costs in Africa have kept margins under pressure and it has yet to turn a profit there.

However, the outlook for India's mobile sector has improved after carriers including Bharti raised voice call prices in July by about a fifth, the first such increase in at least two years in the ferociously competitive market after a vicious price war had sent call prices tumbling and squeezed profits.

Bharti and its rivals in the world's second-biggest mobile phone market of about 870 million users are also betting on a pick up of premium third-generation (3G) mobile data services after they launched high-speed networks this year.

"India has achieved double-digit growth fuelled by non-voice businesses. The arrest of continuously declining prices in India augurs well for the telecom industry," Bharti Chairman Sunil Mittal said in a statement.