Bharti Profit Misses Estimates as Finance Costs Increase
Net income declined 72 percent to 2.84 billion rupees ($53 million) in the three months ended Dec. 31, New Delhi-based Bharti said today. That trailed the 8.39 billion-rupee median of 29 analysts’ estimates compiled by Bloomberg.
Billionaire Chairman Sunil Mittal said market conditions had been challenging in recent quarters due to pricing pressures and rising input costs that damped margins. Mittal last month cut free talk time and revamped management as Bharti prepares for license renewal payments and regulatory changes.
“No clear positive trend is emerging yet,” Sudip Bandyopadhyay, managing director at Mumbai-based Destimoney Securities Pvt. said by phone. “We will have to see a couple of more quarters before we can say that they have come out of the woods.”
Shares of Bharti slumped 3 percent, the most since Dec. 21, to 329.40 rupees at the close in Mumbai trading. The stock was the biggest decliner today on the 27-company MSCI Asia ex-Japan Telecommunication Services Index.
Revenue rose 9.5 percent to 202.4 billion rupees, compared with the median estimate of 203 billion rupees. Net finance costs, including foreign exchange fluctuation, increased to 13.3 billion rupees in the three-month period, from 7.9 billion rupees a year earlier, Bharti said.
Bharti plans to sell $1 billion of bonds by June, Group Chief Financial Officer Sarvjit Singh Dhillon said today.
The Indian rupee was the worst performer after the Japanese yen among Asia’s 11 most-traded currencies against the dollar last quarter. The rupee fell 3.9 percent, pushing up interest costs on Bharti’s overseas debt.
“Issues like making it compulsory for incumbents to participate in auctions to renew licenses” spur a negative view for telecommunications stocks, Harit Shah, a Mumbai-based analyst at Nirmal Bang Equities Pvt., wrote in a Jan. 7 report. Shah, who recommends investors sell Bharti, said India’s plans to redistribute wireless spectrum and abolish roaming charges were also likely to significantly impact revenue of operators.
Customers spent more time on Bharti’s networks in India and Africa last quarter, Bharti said. Total minutes on the network rose 12 percent from a year earlier to 284 billion, the company said.
“The worst seems to be getting over with corrections taking place in customer acquisition practices and the tariffs,” Mittal said in the statement today. “Moreover, on the data front, it is heartening to see strong growth quarter- on-quarter and across geographies.”
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