Business News of Friday, 10 August 2012
Source: Joy Online
Bharti Airtel’s first quarter revenue for 2012 increased by 14% but profit fell by 37% on rising costs and brutal price pressure in India’s highly competitive telecom market, company statements showed Wednesday.
“Total revenue for the quarter, between April and June was US$3.6 billion, up 14% (18% in dollar terms) from US$ 3.05 billion a year ago – and net income was US$141 million, down from US$272 million a year earlier,” the statement said.
Meanwhile, the growth in group revenue came on the back of 44.2% growth in mobile data revenue in India, and 31.5% consolidated revenue growth in Africa, including Ghana.
The statement quoted Bharti Group Chairman and Managing Director, Sunil Bharti Mittal as saying “Telecom revenues in India have been depressed due to hyper-competition and recent regulatory and tax developments.”
“I am happy to note that, despite these adverse developments, Airtel has kept its focus on network expansion, market investments, superior customer experience and new product innovations,” he added.
Mr. Mittal said all expansions and investments came at a cost, which Bharti has not been able to pass on to customers.
The statement said operating expenses (OPEX) also rose 20 percent from a year ago, even as pricing — especially for high-value data services — slipped as companies fought for market share.
It said average revenue per user (ARPU) in India, Bharti’s main market, fell 3 percent in rupee terms a year ago, adding that revenue per minute for voice customers slipped 1 percent from a year earlier and data revenues per customer fell 10 percent in rupee terms from the prior quarter, while revenue per minute for data customers fell 14 percent.
The statement noted that revenue per user in Africa, including Ghana, where Bharti has been gaining market share, fell 10 percent from a year ago in dollar terms.
Airtel Ghana has been gaining market share at one of the fastest rates on the market, but it is not one of the two telcos in Ghana that pays records profits after tax, as it is widely speculated that it is barely breaking even.
Industry analysts have said Bharti has yet to turn its 16 operations in Africa profitable.
Meanwhile, in India, where Bharti is headquartered and market leader, the telecom sector has been plagued by uncertainty since a 2008 scandal over spectrum pricing.
The Supreme Court revoked 122 licenses in February, and now the government plans to re-auction the spectrum at prices operators say are too high.
Three small operators — Etisalat, Videocon and Swan Telecom in India have already exited the market, with more cash-strapped companies expected to follow, and the telecom sector in that country is widely expected to consolidate when the spectrum auction rolls out later this year.
Bharti is also exposed to high spectrum pricing, but is expected to benefit from the consolidation in India.
Bharti has 261 million customers in 17 countries.