Bloomberg News

Bharti Airtel Shares Rise on India Mobile-Phone Usage

May 02, 2012

Bharti Airtel Ltd. (BHARTI), India’s largest mobile-phone operator, climbed the most in five weeks in Mumbai trading after increasing revenue from voice calls in the world’s second-biggest wireless market.

Bharti’s average revenue per user, a key metric of performance in the telecommunications industry, rose to 189 rupees ($3.60) a month from 187 rupees in the previous quarter, the New Delhi-based company said in a statement today.

Subscribers spent an average 431 minutes each month on the phone during the quarter, 2.9 percent more than a quarter earlier after the company offered incentives, said Bharti, controlled by billionaire Chairman Sunil Mittal. To revive profit that has now declined for two consecutive years, Bharti raised tariffs in July after competition with Telenor ASA (TEL) and NTT Docomo Inc. (9437) had cut call charges to a penny a minute in the Asian nation.

“Minutes of use was good this time, better than expectations,” said Abhishek Anand, an analyst at Centrum Broking Pvt. in Mumbai who rates the stock buy. “This is positive considering that they were slipping down on market share. They had promotional schemes in the last few quarters that improved usage and subscriber addition.”

Bharti rose 2.4 percent to 317.95 rupees at the close in Mumbai trading, the largest increase since March 27. The stock was the second-biggest gainer in the benchmark Sensitive Index (SENSEX) today, which declined 0.1 percent.

Missing Estimates

Bharti also reported fourth-quarter profit and sales that lagged behind analysts’ estimates.

Net income fell to 10.1 billion rupees from 14 billion rupees a year earlier, the company said. That missed the 12 billion-rupee median of 38 analysts’ estimates compiled by Bloomberg. Revenue rose 15 percent to 187.3 billion rupees in the three months ended March 31, compared with the 189.6 billion-rupee median of analysts’ estimates.

Bharti started third-generation wireless services last year in a bid to draw subscribers with features such as streaming video and music downloads. The company spent 156 billion rupees at auctions of next-generation spectrum to introduce faster wireless services and started amortizing the spectrum costs and interest on borrowings to make that payment last year.

The mobile-phone carrier is also expanding into countries including Kenya with its purchase of the African assets of Kuwait’s Mobile Telecommunications Co. (ZAIN), to offset slowing growth at home.

Customer Base

“The year has ended with the company’s customer base crossing 250 million across twenty countries,” Mittal said in the statement.

Expenses from the amortization of 3G license fees rose to 1.06 billion rupees, and the company had currency fluctuation losses of 1.32 billion rupees, Bharti said in the statement.

“They are expanding their capital expenditure to add capacity, and they’re experiencing higher finance costs because of the fluctuation of the rupee and higher interest expenses,” said Ganesh Ram, an analyst at Kim Eng Securities Pvt. in Mumbai.

Bharti’s debt exceeded cash and cash equivalents by 650 billion rupees as of March 31, up from 600 billion rupees a year earlier, the company said in the quarterly report.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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