INDIA’S top telecoms company Bharti Airtel said on Thursday (May 2) its net quarterly profit halved in its final financial quarter to March, hit by fierce competition and punishing interest charges.
Consolidated net profit for the three months to March tumbled to 5.08 billion rupees ($94m/£60.37m), down from 10.06 billion rupees ($196m/£126m) in the same period a year earlier.
The drop in profit marked the phone giant’s 13th straight quarterly fall and was well wide of analysts’ forecasts of a 7.0-billion-rupee ($130m/£83.5m) profit, leading to a sharp fall in its shares.
Despite the weak earnings, Bharti’s billionaire founder and chairman Sunil Bharti Mittal said: “Market corrections have started… and pricing stability is returning to the sector in India.”
Weighing on earnings were interest costs from Bharti’s hefty debt, incurred from the purchase of a faster 3G spectrum and the African mobile operations of Kuwait’s Zain in 2010.
The group’s Africa operations, which it bought for $10.6bn (£6.80bn) to extend its global footprint, are losing money.
Bharti, the world’s fourth-largest operator globally, with 270 million clients, is one-third held by Singapore’s SingTel and operates in 20 countries across Asia and Africa.
India’s telecom sector was a market star, but bruising price wars, which have pushed call rates to among the world’s lowest, have removed its shine.
Despite the fact that the number of major telecoms players has fallen from more than a dozen to just seven, due to a Supreme Court ruling that scrapped the licences of a number of smaller firms due to a scandal-tarnished sale, competition remains fierce.
Bharti, which has a more than 30 per cent market share, and other operators also face government calls to pay larger fees to renew licences in years ahead.
India’s boom in phone connections has been overwhelmingly driven by cellular services and the country, with 900 million subscribers, is second only to China in terms of customer numbers.
