Billionaire Mittal's Airtel Gains After Profit Beats Estimates

  • Airtel says data revenues rose 44 percent from year earlier
  • Airtel to buy back 35.9 million shares at 400 rupees each

Bharti Airtel Ltd. advanced in Mumbai trading after India’s biggest wireless operator reported earnings that beat analysts’ estimates.

Shares of the company controlled by billionaire Sunil Mittal rose as much as 3.2 percent to 385 rupees at 9:16 a.m. in Mumbai. Net income increased 2.8 percent to 12.9 billion rupees ($194 million) in the quarter ended March 31, the company said in a statement, exceeding the 11.5 billion-rupee average estimate compiled by Bloomberg. 

Bharti expanded its high-speed fourth-generation services helping it prepare for competition from billionaire Mukesh Ambani’s new carrier, which is planning to enter the industry this year. New Delhi-based Bharti has spent $1.2 billion in the past two months to buy airwaves from rivals enabling it to provide 4G services across the world’s second-largest smartphone market.

Operating performance is “higher than expectations, led by better voice as well as data volume growth in India,” Sushil Sharma, an analyst at Batlivala & Karani Securities Pvt., said in note to clients on Wednesday. “Bharti has the spectrum and cash flows to profitably monetize the data growth. We believe margins will witness gradual improvement as the usage of data rises.”

Bharti’s revenue advanced 8.4 percent to 249.8 billion rupees, compared with the average estimate of 247 billion rupees.

Even with a billion subscriptions, Indian phone companies are under mounting pressure to consolidate as a dozen carriers battle for market share. Concerns about added competition brought on by the entry of Jio, the telecom unit of Ambani’s flagship Reliance Industries Ltd., prompted Fitch Ratings to downgrade its 2016 outlook for the Indian phone industry to negative from stable in November.

Revenue from data services rose 43.7 percent to 44.3 billion rupees, according to the statement. Airtel said its mobile broadband customers in India rose 80 percent in the quarter to 35.5 million. Its African data customer base increased 28.5 percent, the company said.

Bharti plans to buy back as much as 14.3 billion rupees of shares, it said in a separate filing. The buyback will represent 0.9 percent of the total equity capital of the company, or approximately 35.9 million shares at 400 rupees a share.

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