PREVIEW-Top Indian mobile firms' Q1 net seen up on user growth
* What: Bharti Airtel, Reliance Comms Q1 results
* When: Bharti on July 24, Reliance on July 31
* Profits seen up about a quarter as number of users soar
NEW DELHI, July 21 (Reuters) - India's top mobile operators, Bharti Airtel (BRTI.BO) and Reliance Communications (RLCM.BO), are set to report quarterly profit jumped by a quarter as they ride a boom in the world's fastest growing mobile market.
The number of mobile subscribers in India, the world's second-largest wireless market, jumped more than 56 percent in the year to May 31 to about 280 million and consultancy Gartner expects this to grow to 737 million by 2012.
However, there are signs of saturation in India's big cities and bulk of the growth is seen coming from small towns and rural areas, where only one in 10 people have a phone, much lower than the country's average of about 25 percent.
The boom in the industry has also been fuelled by cheaper handsets starting from $15 and as operators expanded their network to small towns and villages.
"I don't see any slowdown in subscriber acquisition at least for the next 8-10 months, at least it is not evident from the capex plans of the top two operators," said Nishna Biyani, analyst at brokerage Prabhudas Lilladher.
"After that it depends on how many new operators start service, what happens in number portability. There might be a lot of churn happening," he said.
India has been adding more than 8 million mobile subscribers every month. China has about 575 million mobile subsribers.
Analysts say stiff competition in India will put more pressure on call tariffs, already among the world's lowest at as low as 1 U.S. cent a minute, and dent earnings growth.
Bharti and Reliance are expected to pursue global assets for growth, analysts said, after both companies failed to reach a deal with Sub-Saharan Africa's largest operator MTN Group (MTNJ.J) to create a global top-10 telecom group.
"They will continue to look forward to the global markets to diversify the source of revenue and both have aspirations to be global players," said R.K. Gupta, managing director at Taurus Mutual Fund.
Competition is also intensifying as new licensees plan to start services by the end of the fiscal year in March. A stronger No. 5 operator Idea Cellular (IDEA.BO), which is acquiring smaller rival Spice (SPCM.BO), also threatens the top players.
The government's plan to increase the annual fee operators pay for the usage of spectrum, or airwaves, by 100-200 basis points across various slabs could also hit the firms' earnings, analysts said. Continued...
