Bharti, RCom outdial St with Q2 numbers

Bharti posts a 73% rise in Q2 profit, RCom clocks 86% growth

MUMBAI: Bharti Airtel and Reliance Communications (RCom) beat expectations with quarterly earnings soaring more than two-thirds on booming subscriber demand.   

Bharti said net profit rose 73% to Rs 1,614 crore ($411 million) under US accounting standards in its second-quarter from Rs 934 crore a year earlier.   

RCom reported an 86% jump in net profit for the quarter ended September to Rs 1,305 crore, excluding a gain of Rs 1,220 crore it booked from the sale of a 5% stake in its towers unit.

While Bharti’s total revenue jumped more than 45% to Rs 6,337 crore, while Reliance witnessed a 29% rise in net sales to Rs 4,553 crore.   

Bharti, which also provides fixed-line and broadband services, said despite average revenue per user (ARPU) falling more than 16% to Rs 366 in the quarter from a year earlier, its operating profit rose 59%.   

RCom maintained its ARPU for the quarter was at Rs 360 and operating profit rose 45% from a year earlier.   

Though Bharti’s ARPU dipped to Rs 366 during the quarter-ended September 2007 from Rs 438 in the corresponding period last year, its minutes of use have risen to 469 from 451 a year ago.

RComsubscribers have clocked 490 minutes of use during the quarter, which is higher than Bharti’s average.

RCom recently received the approval from the government to offer pan-India GSM services across all circles in the country, once it gets the requisite spectrum.

Does that make Bharti, the largest mobile telephony company by subscriber numbers, nervous?

Manoj Kohli, president and CEO, Bharti Airtel, told DNA Money in reply: “Bharti has no such anxieties.”

“We are a child of liberalisation and competition,” he said while responding to a query on whether growing competition in GSM is a concern for Bharti. Recently, all CDMA players applied for GSM spectrum.

According to Kohli, declining ARPU is not a setback for the company. With more and more customers coming from smaller towns and villages, ARPU would inevitably fall, he explained, adding that growth in minutes of use is a positive development.

A quarter of the new Bharti customers added during the quarter ending September 2007 were from rural areas, Kohli said.

On Bharti’s tower business, Kohli said, “We would like it to be as independent as possible.” It is learnt that over 50% of its stake could be diluted after the demerger process is finalised.

While Bharti is seeking to remain a leader in the mobile space with a subscriber projection of 125 million by 2010, Reliance Communications chairman Anil Ambani on Wednesday said that RCOM “is committed to the world’s largest telecom network rollout this year….”

According to Ambani, the Reliance’s nationwide GSM service would be rolled out within a year of getting spectrum.

“We are committed to supporting strong tele-density growth in India and will be at the forefront of affordable connectivity to 500 million Indians by 2010,” he said.

While Bharti crossed the 50-million subscriber figure last month, Reliance Communications had 31.98 million CDMA users at the end of September.

Reliance Telecom, RCOM’s sister concern, operates GSM in eight circles (mainly in the East) and has an estimated 4 million subscribers, but the GSM figures have not been updated for some months.

—With Nivedita Mookerji in New Delhi