Bharti Falls Most in 2 Months After Net Misses Estimates

Bharti Airtel Ltd. (BHARTI) fell the most in more than two months in Mumbai trading after India’s largest mobile-phone carrier posted fiscal fourth-quarter profit that missed analyst estimates.

Shares declined 2.1 percent, the biggest fall since Feb. 21, to 328.05 rupees at the close in Mumbai. Net income rose 89 percent to 9.62 billion rupees ($159 million) in the three months ended March, trailing the 9.96 billion-rupee median of 26 analysts’ estimates compiled by Bloomberg.

Billionaire Chairman Sunil Mittal’s company, which posted slower pace of revenue growth at its African operations, was among carriers that were prohibited from selling new SIM cards in March in Nigeria after missing service quality goals. Bharti, which operates in 17 African nations, is competing with carriers including MTN Group Ltd. (MTN) to woo users on the continent.

Africa didn’t do well,” said Daljeet Kohli, head of research at India Nivesh Securities Pvt. in Mumbai. “That’s a disappointment because many people were looking for Africa to stabilize, that this time they would could come to a break-even point. But that has not happened, so Africa will continue to be a drag on the good work that Airtel does in India.”

Sales increased 13 percent to 222.2 billion rupees. That missed the 223.9 billion-rupee median analyst estimates.

Africa Slowdown

Revenue in Africa increased 16.4 percent in the three months ended March 31, slowing from a 17.2 percent pace in the preceding quarter.

“The quarter was impacted by the seasonal downturn in parts of Africa and regulatory interventions in Nigeria,” Christian de Faria, chief executive officer of Bharti’s Africa business, said in a statement. “Our teams remain focused on accelerating growth through improving the quality of network, growing the data business.”

Bharti is benefiting from an addition in subscribers as well as an increase in voice and data usage in India. Smartphone sales in the South Asian nation almost tripled in 2013, according to International Data Corp., indicating more phone users will use their mobile devices to download videos, check e-mails and use the Internet.

Mobile data revenue in the home market jumped 89 percent from a year earlier to 13.3 billion rupees, the company said.

“We expect the company to continue to grow positively in India,” said Harit Shah, an analyst at Nirmal Bang Equities Ltd. “We expect data use to be the main revenue driver in the next many quarters.”

Less Competition

Phone-service providers in India have been curtailing free minutes as competitive intensity eases. India’s Supreme Court in 2012 canceled 122 licenses to provide wireless services amid graft charges. Reliance Communications Ltd. (RCOM), India’s third-biggest phone service provider by market value, this month increased some tariffs by as much as 20 percent.

Bharti is seeing signs of recovery in India’s mobile phone market and predicts increases in voice tariffs to continue over the next few quarters, Sarvjit Singh Dhillon, group chief financial officer at Bharti Enterprises Ltd., said at a press conference in New Delhi today.

The company will look at “every opportunity” to cut discounted minutes to raise realization from voice calls, said Gopal Vittal, chief executive officer for India operations.

“With input costs going up -- the rising costs of diesel, network costs, the cost of spectrum, the cost of fiber, the cost of rolling out networks -- I think there’s no question that voice realization needs to keep rising,” said Vittal.

The carrier’s average revenue per user in India increased 1.6 percent in the most recent quarter to 196 rupees.

Voice Revenue

While revenue per minute for voice calls at its India operations rose to 37.07 paise in the quarter from a year earlier, it was less than the 37.13 paise in the three months ended Dec. 31.

In February Bharti agreed to acquire Loop Mobile (India) Ltd.’s 3 million users in Mumbai, India’s financial hub.

Bharti, Vodafone Group Plc’s local unit and Idea Cellular Ltd. together account for more than half the total mobile-phone subscribers in the country. India had 903 million mobile-phone connections at the end of February, according to data from the Telecom Regulatory Authority of India.

In February, operators including Bharti and Vodafone won bids for wireless spectrum. Bharti will spend 185.3 billion rupees on the purchase, the company said Feb. 13. It will pay 54.3 billion rupees upfront and the balance will be paid in 10 annual installments, starting after two years, it said.

To contact the reporter on this story: Bianca Vázquez Toness in New Delhi at btoness@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Subramaniam Sharma, Suresh Seshadri

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