BANGALORE, 30 OCTOBER 2009 - Price wars between operators and a larger share of rural subscribers put pressure on revenue and profit growth at Bharti Airtel, India's largest mobile services provider, in the last quarter.
The company reported Friday that revenue grew by 9 percent to 98.5 billion rupees (US$2 billion) under U.S. accounting rules in the quarter ended September 30, while net profit grew by 13 per cent to 23 billion rupees, from the same quarter last year.
Those growth rates were down from the previous quarter, when revenue was up 17 per cent and net profit grew 24 per cent in comparison to the same quarter last year.
The company said it was ready to face the challenges posed by increased competition. Indian operators are expanding frenetically ahead of service roll-outs by new operators such as Unitech Wireless, the Indian joint venture of Norwegian operator Telenor.
Bharti Airtel had 110.5 million mobile subscribers at the end of the quarter, up by 43 per cent from the same quarter in the previous year. It added 8 million new subscribers in the quarter.
India's telecom regulator, Telecom Regulatory Authority of India (TRAI), has reported a decline in ARPU (average revenue per user) and utilization by consumers across service providers from the first quarter of this year.
ARPU for GSM (Global System for Mobile Communications) service providers, for example, fell by 10 per cent in the three months through June 30 compared with the previous quarter, while the drop was 7.2 per cent for providers of mobile services using CDMA (Code Division Multiple Access) technology, TRAI said.
Besides tariff wars between operators, their moves into less lucrative rural markets are also pushing down ARPU and utilization, according to analysts. The rural market is low-margin and geographically dispersed, and in many places does not have basic infrastructure like roads, electricity, and security, said Kamlesh Bhatia, a principal research analyst at Gartner.
Bharti Airtel's network covers 83 per cent of India's population, including 430,000 small towns and villages.
The company's ARPU in the quarter was down by 24 per cent from a year ago, and by 9 percent from the previous quarter. Average minutes of use per user was also down by 15 percent from the previous year, and by 6 per cent from the last quarter.
Mobile service providers have tried to increase revenue on value added services to boost revenue per user. Bharti Airtel's revenue from non-voice services was 9.8 percent of revenue in the last quarter, down slightly from 10 percent in the same quarter last year.
Bharti Airtel's bid earlier this year to position itself as a transnational service provider fell through after disagreement with MTN Group of South Africa on the terms of an alliance.
Sign up for MIS Asia eNewsletters.