Bharti profit drops for 11th straight quarter, faces rising costs

Indian telco sees Q2 profit drop 30 percent and is expected to struggle further amid an uncertain regulatory environment and margin pressure from intense competition.
Written by Ryan Huang, Contributor

Indian telco Bharti Airtel has reported its 11th consecutive quarter of profit decline with margins pressured by intense competition.

In its results announcement [PDF] Wednesday, the telco saw consolidated net profit fall 30 percent to 7.21 billion rupees (US$132 million) for the three months to September. This was despite a one-off gain of 2.39 billion rupees (US$43.9 million) from an outstanding dispute over inter-connect charges.

Revenue for the second quarter rose 17.4 percent to 202.7 billion rupees (US$373 million).

“Despite a seasonally weak quarter, I am pleased to see that our overall revenue growth has sustained through diversified segments and geographies as well as the continuing healthy demand in data services," Sunil Bharti Mittal, chairman and managing director of Bharti Airtel, said in the statement.

However, regulatory concerns could see Bharti's margins erode further, said Vivekanand Subbaraman, a telecommunications analyst at PhillipCapital India, in a Reuters article. 

The newswire noted India was planning to levy more than US$5.5 billion in surcharges on airwaves held by older telcos, of which Bharti's share would be US$1 billion.

There is also a plan to replace superior quality airwaves of companies, including Bharti, with relatively inferior quality airwaves when their permits are renewed starting in late 2014, noted Reuters, which would significantly push up their expenses.

Bharti is nearly one-third owned by Southeast Asia's largest telco SingTel, which will announce its results next week.

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