India’s largest telecom operator Bharti Airtel said on Wednesday its net profit slumped 29.78 per cent to Rs7.21 billion for the quarter ended Sept.30 as increasing competition hit profit margins.
This is the 11th consecutive quarter of decline in the company’s profit. However, Bharti Airtel’s total income went up to Rs202.83 billion for the second quarter of 2012-13 as compared to Rs172.76 billion in the corresponding quarter of previous year, the company said in a statement.
“Bharti Airtel’s second quarter revenue as well as operating margins came above our as well as street estimates. However its bottom line disappointed because of higher tax paid. Profitability was hit due to higher tax expense with tax rate coming in at 52 per cent,” said Ankita Somani, research analyst for IT and telecom, at Angel Broking.
The company’s second quarter results disappointed the Dalal Street. The scrip price fell 0.95 per cent to Rs270.90. It had hit a low of Rs269.65 in the intra-day.
The fall in Bharti Airtel’s share price was in contrast with the overall market trend. The benchmark Sensex of the Bombay Stock Exchange was ruling 0.61 per cent or 115.09 points higher at 18,932.47 points. Competition is seen abating in the world’s second-biggest mobile phone market after a court order revoked the permits of several smaller carriers, which is a positive for market leaders Bharti and the local unit of Vodafone Group.
India’s leading carriers, however, face the risk of paying out billions of dollars in regulatory fees over the next few years with the government planning to impose a surcharge on airwaves held by them and also due to reallocation, or switching, of their superior quality spectrum when their permits are renewed.“The worry remains regulation,” said Vivekanand Subbaraman, a telecommunications analyst at PhillipCapital India. “The regulatory concerns have overshadowed operating performance,” he said, adding Bharti could continue to see its margins eroding.
India is planning to levy more than $5.5 billion in surcharges on airwaves held by older telecommunications companies, from which Bharti’s payout is estimated to be just under $1 billion.