India's Bharti Airtel Posts Strong Revenue, Profit Growth

Bharti Airtel, India's largest mobile services company, on Wednesday reported strong growth in revenue and profit for the quarter ended March 31, benefiting from continuing growth in India's mobile services market and its focus on rural markets.

The company is likely to continue to deliver revenue growth in the quarters ahead because the Indian rural market is still relatively untapped, Sunil Bharti Mittal, chairman and managing director of Bharti Airtel, said in a conference call to discuss the results.

There are also opportunities for the company in the area of value-added services such as mobile commerce, he added.

Mittal warned, however, that the intensity of competition was on the increase with new entrants getting into the market.

The company's revenue for the quarter was 98.25 billion Indian rupees (US$1.9 billion), up by 26 percent from the same period last year. Profit was 22.4 billion rupees, up by 21 percent from the same quarter a year earlier.

The company added 8.4 million new customers in the quarter.

For the fiscal year ended March 31, Bharti Airtel's revenue grew by 37 percent to 369.6 billion rupees, while profit grew 26 percent to 84.7 billion rupees.

The company added 32 million new mobile subscribers during the year, taking the total to 94 million.

The company's results are in stated in accordance with U.S. Generally Accepted Accounting Principles (GAAP).

Bharti Airtel and other top Indian mobile service providers are expanding in the country's rural markets, even as growth in urban markets is reaching a plateau. Bharti Airtel's service now covers 420,000 towns and villages in the country, and about 81 percent of the population.

Rural markets however require larger investment in infrastructure like towers, as population density tends to be lower. To trim capital expenditures in rural markets, Bharti Airtel is focusing on sharing towers, and to do this it has teamed up with two other service providers to set up an infrastructure company, Indus Towers.

India's mobile services market continues to grow, as the Indian user sees the mobile phone as a necessity rather than a discretionary expense, Kapil Dev Singh, country manager of IDC India, said recently.

The country added a record 15.64 million mobile subscribers in March, taking the total number of mobile subscribers at the end of March to 392 million, according to the Telecom Regulatory Authority of India (TRAI).

The country added 13.8 million subscribers in February, and 15.4 million in January, TRAI said.

New rollouts by large service providers helped to increase the subscriber base. Reliance Communications, for example, expanded into offering GSM (Global System for Mobile Communications) services, besides its traditional services using CDMA (Code Division Multiple Access) technology. Reliance said earlier this month that it added 11.3 million subscribers in the first quarter.

The market is expected to grow further once licenses for 3G (third generation) services are awarded to the private sector. But the auction of these licenses was postponed twice in January, and is now not likely before the Indian federal elections are completed by May.

Two government owned companies, Bharat Sanchar Nigam. and Mahanagar Telephone Nigam, were allotted spectrum ahead of the auction, and have started offering services.

Companies like Bharti Airtel are facing falling average revenue per user (ARPU), as fierce competition has helped push down tariffs. The company's monthly ARPU was 305 rupees in the quarter to March 31, down from 357 rupees in the same quarter a year earlier. Services such as SMS (Short Message Service), voice mail and ring tone downloads accounted for about 9.3 percent of revenue.

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