Africa Acquisition Weighs Down on India's Bharti Airtel

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Bharti Airtel's debt in connection with the acquisition of Zain Africa, and taxes in Africa, pushed down the company's profits, even as revenue grew in the quarter ended Sept. 30.

The mobile services operator reported on Wednesday that revenue grew 47 percent to 152 billion (US$3.4 billion) from the same quarter last year. Net profit was down 26.6 percent to rupees 16.6 billion.

The figures for the quarter ended Sept. 30 are not strictly comparable to those in the same quarter last year, because of Bharti Airtel's acquisition in June of Zain Africa B.V. in a US$10.7 billion deal.

Revenue from its African operation was rupees 39 billion. Zain Africa has operations in 15 African countries.

Revenue from India and rest of South Asia alone grew by only 9.2 percent to rupees 113 billion, even as the number of subscribers grew by 32 percent, reflecting growing competition and deep tariff cuts in the Indian market.

The number of Indian subscribers grew by 30 percent to 143.3 million. Average revenue per user (ARPU) in India was down 20 percent to rupees 202 from rupees 252 a year earlier. The company's non-voice revenue from its mobile services, however, was up to 12.7 percent in the quarter from 9.8 percent in the same quarter last year.

The company has been losing market share in India, now at 20.8 percent compared to 23.4 percent a year ago.

The company has operations in Sri Lanka and Bangladesh, besides its mainstay business in India. The company had 147.6 million subscribers in the region at the end of the quarter, and another 40 million subscribers in Africa.

Bharti Airtel has been on an investment spree which was bound to tell on its bottom line, according to analysts. The company, which plans to launch its 3G services in India in the fourth quarter, also invested rupees 156 billion earlier this year in acquiring spectrum for these services.

The company had a net debt of rupees 601.4 billion as on Sept. 30, up from 69 billion in the same quarter last year.

As a result, the interest the company had to pay on its debt increased to rupees 5.8 billion, from 1.3 billion last year. Taxes in Africa further added to expenses.

The company's results are in accordance with International Financial Reporting Standards (IFRS).

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is

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