- Africa tower asset sales led to exceptional one-time gain
- Mobile data traffic climbs 76% and company is rolling out 4G
Bharti Airtel Ltd.’s second-quarter profit beat analysts’ estimates after India’s largest wireless carrier booked a one-time gain on the sale of African tower assets and data traffic climbed.
Net income increased 10.1 percent to 15.2 billion rupees ($234 million) in the three months ended September from a year earlier, compared with analysts’ estimates for 11.9 billion rupees. The earnings included a 6.6-billion-rupee exceptional gain from the disposal of the towers and a net tax benefit.
Bharti is building out high-speed 4G services across the world’s second-most populous country to tap booming data use before billionaire Mukesh Ambani starts a competing network by the year’s end. The nation’s largest carriers, including Reliance Communications Ltd. and Idea Cellular Ltd., are expected to take advantage of loosened regulations around spectrum sharing and trading.
"There’s no great surprise in the results if you exclude the one-time gain," said Rajendra Wadher, a director at PRB Securities Ltd. in Mumbai, who rates the stock a sell. "It’s difficult to forecast how 4G services will boost profitability going forward."
The shares fell 1.9 percent to 352.2 rupees in Mumbai, while the S&P BSE Sensex index declined 0.4 percent.
Sales were 238.4 billion rupees, compared with estimates for 237.4 billion rupees. The company said underlying Indian revenues advanced about 13 percent and that average revenue per user for data rose by 42 rupees to 193 rupees in the second quarter from a year earlier.
There’s a risk that "their 4G will only cannibalize their 3G business," said Deven Choksey, the Mumbai-based managing director at brokerage K.R. Choksey Shares & Securities Pvt.
Bharti is considering options for trimming or consolidating its less-profitable African business. In July, the company said it was in talks to sell units in Burkina Faso, Chad, Republic of Congo and Sierra Leone to France’s Orange SA. The Indian company has sold phone-tower assets in seven African countries for more than $1.7 billion, helping it reduce debt and cut costs.
Singapore Telecommunications Ltd. has a major indirect stake in New Delhi-based Bharti Airtel.