Bharti reports 10th straight quarter profit decline
08 August 2012 | Kavit Majithia
Indian operator Bharti airtel has reported a 10th straight quarter profit decline amidst increasing competition and squeezed margins in the Indian market.
The telecoms giant posted less than projected net profit of 7.62 billion rupees for the fiscal quarter ending in June, a drop of 37% from a year earlier.
Larger operators in the market are further set to experience a sharp increase in operating costs in India, despite a decline in competition after the Indian Supreme Court cancelled licences of smaller rivals after the country’s licence spectrum scandal.
Rivals such as Sistema, Idea Cellular and Telenor’s India unit will all have permits revoked to provide mobile services in the country.
It is expected that with the removal of smaller players operating in the Indian market, there will be an added burden on the larger operators from the government to pay higher fees to allow them to operate in the market.
Another mobile airwaves auction will be held in November, when carriers will have a chance to bid for the available spectrum, but many carriers have complained the minimum bid price is too high.
According to Reuters, Telenor and Sistema have already threatened to pull out of the Indian market if the minimum auction price remains as high as it is now.
Bharti airtel is reportedly in the market to acquire more mobile airwaves to cope with the increasing demand for mobile services, which is presently overstretching existing network capabilities.
Sunil Mittal, chairman at the company, believes revenues in India “have been depressed due to hyper-competition and recent regulatory and tax developments”.
There are increasing rumours in the market that Bharti and Mittal will attempt to ease its negative financial position by filing for an IPO of its tower unit of SingTel, depending on market conditions.
The company has a net debt of $12 billion, as of this quarter, which is largely accounted for by its acquisition of Zain’s African assets in 2010 for $9 billion.
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