Honest 836 Report post Posted July 25, 2008 Low-tariff play helps Bharti Airtel 25 Jul, 2008, 0032 hrs IST, ET Bureau The game of reducing tariffs seems to have worked in favour of Bharti Airtel, the largest mobile operator in the country. Though it reported a 2% drop in average revenue per user (ARPU) during the June 2008 quarter, the higher minutes of usage more than compensated this fall. This helped Bharti maintain its growth momentum in topline, which was well above the expectation. Despite impressive numbers, Bharti’s scrip witnessed a selling pressure in a weak market on Thursday. On BSE, the stock declined 2.2% compared to a 1.1% fall in the Sensex. The demerger of the company’s infrastructure business was reflected in the contracted operating margin during the first quarter. This is because post-demerger, the company has to pay tower-related cost to new companies, including Bharti Infratel and Indus Tower. Apart from this, higher fuel and power costs pushed network expenses further. This led to a two-fold jump in the company’s network operating expenses compared with the same quarter last year. As a result, operating margin of its mobile business shrank by 500 basis points. However, this was partly compensated by the slower growth in depreciation. With the demerger of tower business, the fixed assets got reduced from Bharti’s balance sheet, and hence, lower depreciation. The combined effect resulted in a growth in operating profit, which was in line with a 44% growth in topline (in US GAAP). The company seems to be well on track of its diversification plan - both geographically and the business segment-wise. The management claims that the direct-to-home (DTH) operation will be launched by year-end. Similarly, the company’s Sri Lankan project is well on schedule. This keeps hopes alive for the company to show robust growth in the coming quarters. Share this post Link to post Share on other sites
KumaarShah 143 Report post Posted July 25, 2008 I think all operators will benefit only if they lower tariffs now. Otherwise, there are people who will only use the mobiles for missed calls. Then the ARPUs will go souther than the South Pole. Even RCOM would have reported higher minutes of usage in the corresponding period as Airtel's. Share this post Link to post Share on other sites
