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Airtel Q1 Lags F'cast; Out Of Top 10 M-Cap List
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India's top telecoms carrier Bharti Airtel reported its 10th straight quarter of profit decline as competition squeezed margins despite gaining a bigger subscriber share, sending its stock to the lowest level in more than two years.
Bharti's shares were down 6.4 per cent at Rs 274.80, losing about Rs 7,215 crore worth of market capitalisation in a single day. The shares touched a low of Rs 272.40 and were heading towards their biggest single-day loss since February.
Bharti, controlled by billionaire Sunil Mittal, said consolidated net profit fell 37 per cent to Rs 762 crore for its fiscal first quarter ended June from a year earlier, missing analyst estimates.
The sharp fall in share prices also pushed the telecom major out of the top-10 list in terms of market-capitalisation. Airtel's m-cap slipped to Rs 1,08,305 crore, making it the 11th most valued firm, as against ICICI Bank's Rs 1,12,006 crore m-cap which pushed it to 10th place.
The top-10 list is led by RIL with m-cap of Rs 2,59,409 crore, followed by TCS (Rs 2,45,141 crore), ONGC (Rs 2,37,885 crore), Coal India (Rs 2,19,462 crore), ITC (Rs 2,04,529 crore), HDFC Bank (Rs 1,40,568 crore), SBI (Rs 1,39,332 crore), NTPC (Rs 1,37,740 crore), Infosys (Rs 1,31,154 crore) and ICICI Bank (Rs 1,12,006 crore).
Bharti dominated customer additions in the three months to June as its smaller rivals including Telenor's India unit braced for a cancellation of their operating permits. Still, all was not smooth sailing for the carrier nearly a third owned by Southeast Asia's top phone carrier SingTel as the market remained highly competitive.
"Telecom revenues in India have been depressed due to hyper-competition and recent regulatory and tax developments," Mittal, who is Bharti's chairman, said in a statement on Wednesday.
The Supreme Court of India said it would revoke all permits awarded to eight of Bharti's rivals such as Sistema and Idea Cellular in a scandal-tainted 2008 sale. The government is planning to hold a mobile airwaves auction in November before the permits expire.
Carriers have complained that the minimum bid price is too high, with Telenor and Sistema threatening to pull out of India if the auction becomes too costly.
While bigger carriers such as Bharti and Vodafone's local unit are not affected by the court order, they are looking to buy more airwaves to feed their overstretched networks in the world's second-biggest mobile phone market.
Voice call prices - the mainstay of Indian mobile carriers - have been stable in recent months, but the market is yet to recover from the sharp price cuts during a price war two years ago. Mobile data is at a nascent stage.
At a time when growth in its home market had started slowing, Bharti in 2010 ventured into Africa by acquiring Kuwaiti telecoms Zain's operations in 15 countries in a $9 billion deal and became the world's fifth-biggest mobile phone carrier by subscribers.
But high costs in Africa have kept margins under pressure and Bharti has yet to turn the African operations profitable.
Revenue Below Estimates
Overall revenue rose 14 per cent in the quarter ended June to Rs 19,350 crore, also missing estimates.
Analysts had expected Bharti, which operates in 20 countries across Asia and Africa, to post a net profit of Rs 1,217 crore on revenue of Rs 19,579 crore, according to Thomson Reuters I/B/E/S.
Network operating expenses in the quarter rose an annual 22 per cent as Bharti set up more mobile sites, while sales and marketing expenses grew 31 per cent to increase the company's market share. That squeezed the operating (EBITDA) margin to 30.2 per cent from 33.6 per cent a year earlier.
Monthly average revenue per user in India declined 2 per cent in the quarter from the previous three months, while in Africa it fell 4 per cent. Net loss for Bharti's African operations more than doubled from a year earlier to Rs 669 crore.
By 0759 GMT, shares in Bharti were down 2.4 per cent in a Mumbai market that rose 0.3 per cent. The stock dropped as much as 4.5 per cent to its lowest level since May 25, after the earnings were announced.
IPO Of Tower Unit
India's top telecoms carrier Bharti Airtel said on Wednesday it is considering an initial public offering of its tower unit, Bharti Infratel Ltd.
Earlier, Bharti Airtel reported its 10th straight quarter of profit decline as competition squeezed margins despite gaining subscriber market share from some of its smaller rivals.