Bharti Airtel misses profit as price war brews

By ERIKA KINETZ

posted: 29 DAYS 9 HOURS AGO

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MUMBAI, India -Bharti Airtel Ltd. reported a lower-than-expected profit Friday as a brewing price war among India's mobile operators depresses margins and threatens to erode the market share of India's largest mobile telephone company.

Net profit for the July to September quarter grew 13 percent from a year earlier, to 23.21 billion rupees ($493.8 million), while revenue grew 9 percent, to 98.5 billion rupees ($2.1 billion).

"We are ready to face the challenges posed by heightened competition," chairman Sunil Bharti Mittal said in a statement. "We are confident of emerging winners through our superior offerings."

Bharti said it had 113.4 million customers at the end of September, up 42 percent from the same time last year. However, its market share fell to 23.5 percent, from 24.6 percent a year earlier.

India's fast-growing mobile phone sector is getting increasingly crowded, and the race is on to recruit subscribers.

In June Tata DoCoMo, a joint venture of India's Tata Teleservices Ltd. and Japan's NTT DoCoMo Inc., launched in India, offering per second instead of per minute billing.

Then, on Oct. 5, Reliance Communications slashed its rates, with a plan that offers 0.50 rupee ($0.01) a minute calls.

On Friday, after markets closed, Bharti joined the fray, announcing a new per second billing plan, with 0.01 rupee per second in-network calls.

Bharti, Vodafone and Idea Cellular all showed sharp sequential declines in net additions of new subscribers in September, according to analysts at Macquarie Securities.

Net subscriber additions for Bharti fell to 2.4 million that month, down from just over 2.8 million, the biggest ever decline for Bharti in its history, according Macquarie.

Bharti's efforts expand into Africa, by merging with South Africa's MTN Group Ltd. to create an emerging market mobile phone giant with over 200 million subscribers, were stymied in September, when political pressures forced the two companies to break off negotiations for a second time.

Bharti director Akhil Gupta told reporters Friday the company remains interested in Kuwait's Zain Telecom, but added that there are no immediate merger plans.

"At the moment there is nothing. But if an opportunity about Zain comes, I am not saying we are not interested or not looking at it," he said.

The stock closed down 6.4 percent, at 292.15 rupees a share on the Bombay Stock Exchange, while the benchmark Sensex index slid just 0.97 percent, to 15,896.3 points.

2009-10-30 09:38:06