Second-quarter net income dropped to 16.6 billion rupees ($374 million) in the three months ended Sept. 30, compared with 22.6 billion rupees a year earlier, New Delhi-based Bharti said today. That lagged behind the 17.8 billion rupee average of 27 analyst estimates compiled by Bloomberg.
Bharti, controlled by billionaire Chairman Sunil Mittal, fell in Mumbai trading as intensifying competition with Vodafone Group Plc and Reliance Communications Ltd. drove down monthly phone bills in India by 20 percent. Bharti is expanding into countries including Kenya with the $9 billion purchase of the African assets of Kuwait’s Mobile Telecommunications Co. to offset slowing growth at home.
“In Africa, the turnaround is going to take a while,” said Naveen Kulkarni, an analyst with MF Global Ltd. in Mumbai. “It will take at least two to three quarters for them to get a foothold there, and to maintain margins.”
Bharti fell 0.9 percent to 331.55 rupees as of 10:55 a.m. in Mumbai trading. The benchmark Sensitive Index, or Sensex, was unchanged. The stock has advanced less than 1 percent this year compared with the Sensex’s 20 percent climb.
African Expansion
Manoj Kohli, chief executive officer of Bharti’s Africa business, plans to invest in expanding new businesses in Nigeria, Gabon, Zambia, Malawi, Niger and Uganda after the company completed its purchase of the African assets of Zain.
The company plans to invest $1.2 billion in the six countries over the next three years, Kohli said in July.
Japan’s NTT DoCoMo Inc. and Norway’s Telenor ASA triggered a price war last year when they entered India with cut-rate plans to win a larger share of a market that is forecast by researcher Gartner Inc. to exceed 993 million users by the end of 2014. India had 671 million mobile-phone accounts in August, according to the phone regulator, lagging behind only China.
Bharti said it had 195 million subscribers across 19 countries as of Sept. 30, according to today’s statement.
Sales rose 47 percent to 152.2 billion rupees. That compared with the 150 billion rupee average of 37 analyst estimates. Earnings before interest, tax, depreciation and amortization, or Ebitda, rose 19 percent to 51.2 billion rupees.
“The margins in Africa are still low,” Kohli said. “By the time we reach the next fiscal year we will see improvements.”
Falling Phone Bills
Bharti announced it completed its purchase of the African assets of Zain, as Mobile Telecommunications is known, on June 8. The acquisition gave the company 42 million new subscribers and access to a population of about 450 million across 15 African countries including Ghana and Uganda.
Bharti’s average revenue per user, a key measure of performance in the telecommunications industry, plunged 20 percent in India to 202 rupees a month. That’s cheaper than Bharti’s average phone bill from its Africa operations.
Bharti is rolling out a third-generation wireless network in India this year that will allow it to begin providing faster data services on smartphones this year. The company paid the government 123 billion rupees for permits in 13 of India’s 22 telecommunication zones, and 33 billion rupees in June for licenses to offer wireless broadband service in four regions.
The company also paid $300 million in January for a 70 percent stake in Abu Dhabi-based Warid Telecom Group’s Bangladesh operations and plans to invest $200 million in the next five years in its mobile operations in Sri Lanka.
