Bharti Airtel to invest $2.5 bn on expansion

Written by Agencies | New Delhi, July 24: | Updated: Jul 24 2008, 22:04pm hrs
Driven by robust subscriber growth, Bharti Airtel, country's leading mobile operator, on Thursday posted a 34 per cent rise in its net profit at Rs 2,025 crore for the first quarter ended June 30, 2008.

Bharti Airtel, in which Singapore-based SingTel owns 30 per cent share, said its revenue as per US accounting rules, rose by 44 per cent to Rs 8,483.30 crore for the latest quarter from Rs 5,904.60 crore in the first quarter ended June 30, 2007.

Shares of the company closed at lower by 2.21 per cent on the Bombay Stock Exchange on Thursday.

The company is maintaining its guidance for standalone capex of over 10,583 crore (USD 2.5 billion) for the full year till March, company's Chief Financial Officer Sarvjit Dhillon said.

Bharti, which accounts for nearly a quarter of the country's total mobile users, added 7.4 million users in the in the first quarter of this fiscal. Its all India marketshare stood at 24.2 per cent in wireless segment.

During the quarter the company had an EBIDTA (Earnings before Interest, depreciation, tax and amortisation) of Rs 3,522 crore, up 44 per cent from the same period last fiscal.

The EBIDTA margin was 41.5 per cent in the quarter.

"It has been a particularly strong quarter, with monthly customer adds crossing the 2.5 million mark," Chairman and Managing Director Sunil Mittal said in a statement.

"This clearly demonstrates the Indian telecom growth story is intact and the rural markets are witnessing strong uptake. We are confident of continuing to lead this growth ory, he said."

"The quarter saw robust growth as we achieved economies of scale but acknowledged that tariffs are under pressure. The low average revenue per user is not a matter of concern for the company. The engine of growth has been huge subscriber addition," Bharti Airtel CFO and Joint MD Akhil Gupta said.

He said the the company's margins are not under pressure even as EBIDTA margins remain the same, ARPU is low and minutes of usage is also low.

"These parametres don't worry us," Gupta said. During the quarter the ARPU was Rs 350, compared to the previous quarter's Rs 357.

Indian mobile operators have been adding over 8 million subscribers a month. Most of the news users are coming from the rural areas, where the tele-density is still about 10 per cent compared to a national average of about 25 per cent.

The number of mobile subscribers in India, the world's second-largest wireless market after China jumped to about 280 million, according to the latest figures.

Bharti Airtel competes with Anil Ambani's Reliance Communications and unlisted Vodafone Essar, controlled by Britain's Vodafone Plc.

Both Bharti and Reliance had separately held talks with MTN Group of South Africa for a combination that would have created a global top-10 telecoms firm, but in both the case talks failed during negotiation process for different reasons.