INDIA BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...

BHARTI NET UP RECORD 79% AT RS 934 CR

 Riding high on a near doubling of subscriber base, Bharti Airtel, the country's largest mobile operator, on Friday announced a record 79% growth in net profit to Rs 934 crore for the quarter ended September, 2006, from Rs 521 crore in the corresponding period of the previous year. This is the company's highest net profit growth in the last seven quarters. The company's net sales jumped 61% to Rs 4,357 crore from Rs 2,709 crore

   Buoyed by these strong numbers, Bharti's market-cap breached the Rs 1 lakh crore mark on Friday to touch Rs 100,461 crore, before finishing the day at Rs 99,949 crore. At present, only five companies in India — ONGC, RIL, Infosys, TCS and NTPC — have an m-cap of over Rs 1 lakh crore. The company's share price rose Rs 22.95 to close at Rs 527.30 — 5.55% higher than the previous day's close. In the last 12 months, Bharti's shares have gained 67%, against a 64% growth in the BSE Sensex.

   The company's growth has been primarily driven by a rapid increase in its subscriber base. It has added 41.1 lakh customers in the quarter ended September 30, 2006, and its subscriber base over the last 12 months has risen 81.9% to 28.7 million. During the same period, the company's GSM subscriber base has grown 92.3% to 23.07 million.

   Bharti Airtel has also witnessed a rise in margins, with its EBITDA to total revenue ratio rising to 39.1% for the quarter ended September 30, 2006, from 37.7% in the corresponding quarter of the previous year. The company's average revenue per user has, however, declined to Rs 438 per month in Q2 FY07 compared to Rs 476 per month in Q2 FY06.

   “The company is implementing a $2-billion network expansion plan this fiscal to double the number of cell sites, and is confident of maintaining the present subscriber growth rates with economies of scale beginning to kick in,” Bharti Airtel CFO and joint MD Akhil Gupta told. “At the half-way mark, we have already invested $1.18 billion of this capex while our cell sites numbers crossed the 30,000 mark from about 20,000 in March, 2006,” he added.

   Mr Gupta attributed the ARPU drop to a lowering of call rates and extension of rural coverage during this period. The mobile business continues to be the fastest-growing segment for Bharti Airtel. Its data reveal that this segment accounted for 74% of revenues in the first quarter, long-distance services 18%, and Internet connections contributing the rest. “Over the coming quarters, revenues from the wireless business will have a constant 70:30 ratio, with respect to other services,” said Mr Gupta.

   India has raced past China to emerge as the fastest-growing telecom market in the world, with its monthly subscriber additions crossing the 6 million mark in September. Telecom service providers are certain to continue delivering stronger performances as the country's mobile base is projected to increase from 126 million currently to 200 million by October, 2007, and 500 million by 2010.