MUMBAI, India (AP) — Bharti Airtel’s profit slid in the latest quarter as India’s largest mobile phone company lost market share and cut call rates amid hyper-competition in its fast-growing home market.
Net profit for the July-September quarter was 16.6 billion rupees ($374.3 million), down 26.6 percent from a year earlier, the company said Wednesday.
Revenue grew 47 percent from the year before to 152.2 billion rupees ($3.4 billion), including 38.9 billion rupees ($876.7 million) from its first full quarter of operations in Africa. India and South Asia revenue grew 9.2 percent.
Bharti’s market share for wireless customers in India slid to 20.8 percent from 23.4 percent a year earlier, and rates per minute dropped 21 percent to 0.44 rupees, or just less than one cent.
The company in June completed its $10.7 billion acquisition of the Africa assets of Kuwaiti cell phone operator Zain, in one of the largest cross-border deals in Indian history. Higher taxes and interest related to its Africa business also hurt profits, the company said.
Bharti turned to Africa as a reprieve from the grueling competition in India, where fast growth has attracted a slew of new operators who are undercutting the already battered prices of established players by one-third to one half, analysts say.
Angel Broking analyst Srishti Anand said those low rates are unsustainable. She said that while the worst of India’s price war seems to be over, she is concerned that Bharti extended its market reach in Africa by slashing call rates.
Bharti said its wireless customers in Africa grew 10 percent to 40,082 users from the prior quarter, while the average rate per minute slid 9 percent, to just less than $0.07 per minute.
“We need to read what strategy they are adopting in Africa,” Anand said.
A poll of analysts by Thomson Reuters had forecast net profit of 16.7 billion rupees ($376.3 million) and revenue of 151.6 billion rupees ($3.4 billion).
“Things still look very bright given the low penetration in the rural parts of the country,” Sanjay Kapoor, chief executive for India and South Asia operations, told reporters. “In a hypercompetitive environment now there’s a bit of stability.”
Bharti said it plans to start rolling out high-speed 3G services in India this quarter, which analysts say could help halt price declines. Anand said rival Tata DoCoMo announced 3G rates at a 33 percent premium Tuesday, which gives other operators room to charge similar premiums.
The stock fell 0.6 percent to 331.9 rupees ($7.5) in midmorning trading in an otherwise flat market on the Bombay Stock Exchange.