* Net profit falls about 10 pct but ahead of estimates
* Strong operating performance buoys shares
* Bharti and key rivals gaining from reduced competition
By Devidutta Tripathy
NEW DELHI, July 31 India's mobile market leader
Bharti Airtel Ltd's improving domestic operating
performance raised hopes that the battered sector is taking a
turn for the better even as the company posted a 14th
consecutive quarter of falling profit.
Bharti Airtel, nearly a third owned by Southeast Asia's top
phone carrier SingTel, reported consolidated net
profit fell about 10 percent to 6.89 billion rupees ($114
million), hit by foreign exchange losses due to the weaker rupee
and continued losses at its African operations.
But its stock jumped as much as 8.4 percent as investors
were heartened by growth in key metrics such as average revenue
per user and rates per minute as competition cools following a
years-long price war in the crowded India cellphone industry.
"Things should be looking up as far as the sector is
concerned in terms of earnings," said K.K. Mital, a portfolio
manager at Globe Capital Market in New Delhi.
However, regulatory uncertainty remains a worry for an
Indian mobile market that is the world's second-biggest by
users. Bharti and others face several regulatory headwinds in
Indian including high spectrum prices and a government demand
that they pay billions of dollars in spectrum surcharges.
Still, Bharti and rivals such as Vodafone Group Plc's
Indian unit and Idea Cellular are benefiting
from easing competition as several smaller players were forced
to shut or scale back after a court invalidated their permits.
The bigger carriers have in recent months raised prices by
cutting discounts. Vodafone India earlier this month reported
13.8 percent growth in service revenue on better-than-expected
growth in minutes and rate per minute.
The "market seems to be coming to some kind of rationality,"
Sarvjit Dhillon, chief financial officer at Bharti Airtel's
parent, told reporters after the earnings release on Wednesday,
adding regulation was "still an issue".
By 0718 GMT Bharti shares were trading 5.8 percent up.
Rivals Idea Cellular and Reliance Communications
jumped 4.2 percent and 1.8 percent, respectively. The two
companies report earnings on Thursday.
Bharti's net profit of 6.89 billion rupees beat the 6.57
billion rupees average estimate of analysts, according to
Thomson Reuters I/B/E/S. Revenue for the quarter rose an annual
9 percent to 202.6 billion rupees, missing analyst expectations
of 211 billion rupees.
Bharti, which entered Africa in 2010 with a $9 billion
acquisition, has yet to make its operations there profitable and
the debt it took on to fund the purchase has weighed on its
The company's African operations continued to lose money,
with Bharti's international business reporting a net loss of
7.03 billion rupees before exceptional items. The African
operations were hurt by regulatory changes and political unrest
in some key markets, Bharti said.
Average revenue per user (ARPU), a key metric for mobile
carriers, rose 4 percent sequentially for Bharti's Indian
operations to 200 rupees a month and total minutes of use in
India grew 2 percent from the previous quarter. African ARPU
fell 7 percent sequentially to $5.5 per month.
Bharti, which recently sold a 5 percent stake to a Qatari
investor, said its net debt had fallen to $9.8 billion from
$10.7 billion at the end of March.