Bharti Q2 net up 259%

Shailendra Bhatnagar

NEW DELHI: Bharti Tele-Ventures Ltd., India's top listed mobile services firm, said its quarterly profit more than trebled as users surged thanks to falling call rates in the world's fastest growing major mobile market.

Bharti, the country's number two mobile services provider which is owned by Singapore Telecommunications Ltd. by a margin 28 percent, has been a major beneficiary of a mobile revolution in a country that now boasts 44 million users.

This number is expected to more than double by the end of 2005 as more users, lured by rock-bottom call rates, enter the partially occupied market. Only four in a 100 people own a handset, compared to the 25 of 100 in China.

"Despite falling call rates and tough competition we have been able to have robust growth," Akhil Gupta, joint managing director at Bharti, told reporters.

Bharti has a nearly 20 percent share of the mobile market, which is adding up to 1.6 million users each month. Bharti, with a market value of around $6.4 billion, said its consolidated net profit in the second quarter ended September 30 was Rs 334 crore, up from Rs 93 crore a year earlier and compared with a consolidated net profit of Rs 296 crore in the first quarter.

Revenue at New Delhi-based Bharti, an aggressive player in the fragmented but furiously expanding market, rose 62.6 percent to Rs 1,860 crore.

"Profit is in line with market expectations. The strong growth is being driven by subscriber numbers," Manish Srivastava, a Singapore-based telecoms analyst for ABN Amro Asia Securities, told Reuters.

Bharti's shares were down 1.1 percent at Rs 156.1 after the results were announced, compared with a one- percent rise in the broader market.

Bharti, also 15.17 percent owned by private equity giant Warburg Pincus, said its mobile user base surged 88.7 percent to 8.7 million at end-September and its total customers, including fixed-line subscribers, rose 85.3 percent to 9.47 million users.

Over the past 10 to 12 quarters mobile call rates have fallen on average by around 12 percent in each quarter, industry data shows. A mobile to mobile call in India now costs about two U.S. cents a minute -- one of the lowest tariffs in the world.

Bharti, which began mobile services in 1995, competes mainly with larger rival Reliance Infocomm Ltd., state-run Bharat Sanchar Nigam Ltd. and the Indian mobile unit of Hong Kong's Hutchison Whampoa conglomerate.

Bharti's mobile footprint now extends to 19 of the 23 circles or zones making up the domestic telecom sector compared with 15 a year ago. A circle is roughly equal to a large city or a state. Bharti plans a nationwide mobile reach by early next year.

In recent days Bharti's stock had jumped 50 percent so far this year, outperforming a three percent slide in the main index. Bharti currently trades at 23.8 times its forecast in March 2005 earnings, versus 14 times for the Mumbai index. Singapore Telecommunications, Southeast Asia's biggest telephone company, trades at a forward earnings multiple of 14.69.

There is huge demand for phones in India but only 20 percent of the country is covered by mobile signals. GSM and CDMA networks of 11 carriers cover only 1,700 out of the 5,200 towns in the nation, but firms are now expanding into untapped rural areas and smaller towns.