Bharti Q2 net triples on quarter

Shailendra Bhatnagar

NEW DELHI: Bharti Tele-Ventures Ltd, India's largest cellular services provider, posted a profit for the third quarter in a row on Thursday, powered by a sharp growth in users.

Its shares rose as much as 6.4 percent to 75.45 rupees after the results were announced in a weak market.

Bharti, 16 percent owned by Singapore Telecommunications Ltd, derives more than 60 percent of its revenue from the booming cellular sector, which is nearly doubling each year.

Drivers are one of the world's lowest call rates -- as cheap as two U.S. cents a minute -- and a market where just two people out of 100 own a mobile phone, compared with 80 in Singapore.

Bigger rival China, with the world's largest mobile market, has a penetration of 19 percent and more than 60 percent people in Europe own a mobile phone.

Bharti's network, spanning 15 out of the 22 circles that form the domestic telecoms sector, also provides fixed-line, domestic long distance, overseas calls and Internet access.

New Delhi-based Bharti, which plans to list in the United States but has set no firm date, said its consolidated profit totalled 930 million rupees in the second quarter ended September 30. That compared with a loss of 1.29 billion rupees a year earlier.

Second-quarter profit tripled from the first-quarter net of 310 million rupees.

Turnover of Bharti, which has a market value of $2.9 billion, surged 74 percent to 11.44 billion rupees.

"The profit is higher than my expectations -- most likely because of operating margin expansion," said Amitabh Chakraborty, head of institutional equity at IDBI Capital Markets Ltd.

"The stock remains a growth story."

Bharti, one of the early entrants in the GSM sector, said it had 4.6 million cellular users at the end of September, marking a doubling over the past year.

Total customer base rose 91 percent to 5.1 million subscribers. Its share of the growing cellular market, estimated at at least 100 million by 2008, is just over one quarter.

"Performance during the quarter has further strengthened our position in the industry. The strong improvement in profit illustrates the benefit of scale and size," Chairman Sunil Bharti Mittal said in a statement.

The nine-year-old sector has seen a sharp rise in the number of users that are now around 19 million and growing at about a million a month, but cellular firms have seen average revenue per user fall as they slash tariffs to take on competition from limited mobility services firms.

Apart from a dozen GSM firms like the Indian mobile unit of Hutchison Whampoa conglomerate, Bharti slugs it out with powerful business groups Tata and Reliance, which offer the cheaper mobile services that work on the CDMA platform.

Bharti's stock has leapt 80 percent since the end of June, compared with the 31.4 percent rise in the Bombay Stock Exchange's main index.

Reuters