Bharti posts $14 million Q1 net loss

By Shailendra Bhatnagar

NEW DELHI: Bharti Tele-Ventures, a leading Indian telecom services provider,

reported on Wednesday its April-June net loss widened, despite revenue nearly

doubling, because of expenditure on expansion. New Delhi-based Bharti, one of

three integrated telecom service providers in India, offers mobile, fixed-line,

national long-distance and overseas phone services and Internet access.

Bharti, which in February became the first mobile operator to get listed on

domestic markets, said its first-quarter loss rose to 676.2 million rupees ($14

million) from 278.3 million a year earlier. Total revenue rose to 5.39 billion

rupees from 2.76 billion rupees. Analysts said losses in the initial years are

commonplace in the money-guzzling telecom sector as companies spend vast amounts

to set up costly infrastructure and undergo bruising prices wars to win

customers.

"Costs have risen because of the expansion that the company has

undertaken and in improving the quality of its network," said Kalpesh

Parekh, analyst at Sushil Finance Ltd. This was reflected in the interest costs

tripling to 620.7 million rupees, and depreciation and amortization costs

surging 128 percent to 1.24 billion rupees. The company said it had also booked

pre-operative costs of 207.5 million rupees, compared with 60.5 million rupees a

year earlier, but did not provide more details.

Bharti rolled out a clutch of services across the country in the past

quarter, launching fixed-line operations in the southern states of Karnataka and

Tamil Nadu and also began mobile services in three northern and two central

provinces. Bharti now provides mobile services in 14 of the 22 telecom circles.

Cellular Business

Bharti had 1.6 million users at the end of the quarter, up 128 percent from a

year earlier, making it the leading cellular service provider in a country of

over a billion people. Mobile services accounted for approximately 75 percent of

total revenue, a company statement said. India's $5.0 billion mobile phone

sector, billed as one of the fastest growing markets globally in this decade,

has some 7.4 million users, which are expected to surge at a compounded annual

growth rate of 46 percent in the next five years.

Bharti controls more than a fifth of the total market and competes mainly

with Hutchison Whampoa's Indian unit and the unlisted Idea Cellular Ltd, owned

jointly by U.S. giant AT&T Wireless, India's Tata group and the Birla

conglomerate. Bharti's shares ended up 2.62 percent at 31.30 rupees, while the

benchmark Bombay index inched down 0.11 percent. At the current price, the stock

is still down 30 percent from its initial offer price of 45 rupees. "The

stock is a long term story," Parekh said.



(US$1 = Rs 48.66 )

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