Bharti Airtel Ltd, India’s top phone carrier, missed expectations but still reported its first quarterly profit rise in four years as the embattled domestic market turns the corner after a years-long price war.
Consolidated net profit more than doubled to 6.10 billion rupees, Bharti said on Wednesday, but was sharply lower than analysts’ estimates of 10.44 billion rupees. Before tax-related one-off costs, net profit was 8.32 billion rupees.
Shares in Bharti, valued at about $20 billion, pared gains to trade up 0.8 per cent at 9:58 a.m. after rising as much as 2.9 per cent after the results were released.
Bharti and its main rivals in India, including the local unit of Vodafone Group Plc, last year raised voice prices for the first time in three years. They continue to cut discounts previously offered to lure customers in a highly-competitive market.
Carriers have seen benefits of reduced competition after several smaller rivals were forced by a court order to either shut down or scale back operations. There are still about a dozen players, but the top three telecoms now account for more than 70 per cent of mobile industry revenue.
While Bharti’s results show a turnaround in the domestic market, the company faces a serious challenge from a mobile spectrum auction starting February 3.
The auction is attracting interest from eight carriers, including cash-rich conglomerate Reliance Industries. Bharti must buy new airwaves in the auction in at least two key cities it serves to continue operations there beyond 2014.
The entry by Reliance Industries may prop up bid prices and the company could challenge Bharti and others if it launches voice services, analysts say.
Bharti, which entered Africa in 2010 by buying $9 billion in money-losing mobile phone assets, has yet to turn a profit there. It could sell its telecoms towers in Africa for up to $2 billion, which would help cut some debt, sources told Reuters last week.
Nearly a third owned by Southeast Asia’s top phone carrier SingTel, Bharti operates in 20 countries across Asia and Africa, but India is its main market, contributing about 70 per cent of its revenue.
Mobile data services were growing fast in India and Africa, Bharti said in a statement. It said growth had returned to Nigeria, its largest African market.
Total revenue for the three months ended December rose 13 per cent to 219.39 billion rupees, marginally lower than estimates.
Average revenue per user, a key metric for telecoms, rose 1 per cent sequentially for both Bharti’s Indian and African operations. Total voice minutes sold in India rose 1 per cent from the previous quarter.