Bharti Q3 Disappoints – What to Do?

February 2, 2011   ·   1 Comments

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Telecom giant Bharti Airtel on Wednesday posted a 40.62 per cent dip in third quarter net income to Rs 1,303.3 crore, hurt primarily by an increase in spectrum charges and one-time costs related to its brand relaunch.  The company had registered a net income of Rs 2,194.9 crore in the October-December quarter of the previous fiscal.  

Total revenues of the company, however, were up by 51.14 per cent at Rs 15,576 crore in the December quarter, compared to Rs 10,305.3 crore in the year-ago period.

On a year-on-year basis, the company’s income before taxes dropped on account of an increase in spectrum charges in India (Rs 80 crore) and an increase in net interest outgo (Rs 471 crore), apart from the one-time brand relaunch cost and forex losses, the company said.

On a quarter-on-quarter basis, Bharti Airtel’s income before taxes was impacted by the one-time brand relaunch cost of Rs 340 crore. In addition, adverse foreign currency fluctuation in Africa and India resulted in an exchange loss of Rs 151 crore for the company in the third quarter of the 2011 fiscal, it added.

The company’s average revenue per person (ARPU) stood at Rs 198 in the December quarter, compared to Rs 202 in the September quarter.

Shares of Bharti Airtel moved up by 3.52 per cent to an early high of Rs 325.70 on the Bombay Stock Exchange today.  The outlook for India’s mobile market — the world’s second biggest and the fastest growing by wireless customers — has improved after prices steadied last year following cut rate competition which sent call pricing tumbling in late 2009.

But Africa remains a worry for Bharti where it acquired the loss-making telecoms operations of Zain in 15 countries in a $9 billion deal in June to become the world’s fifth-biggest wireless carrier.

 Bharti, 32.2 per cent owned by Southeast Asia’s top telecoms firm SingTel, competes in India with 14 other companies including Reliance Communications and Vodafone.

Investors are awaiting the take-off of third-generation ( 3G ) mobile services that would boost carriers’ revenue from data in India where voice services contribute close to 90 per cent of the revenue for cellular companies.

Verdict: Bharti can tumble in near Future due to Disappointing Numbers. In that Case it can easily see the Levels of 260-280 about 10-15 % from the Price of Now. There Stock can be taken from a Trading Perspective taking a view of about 6 Months, it can yield a return of about 30%.

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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  • With the ongoing 2G scam, the only BIG player in telecom player is Bharti. With Zain acquisition going to ring in some profits soon, Bharti remains the safest telecom bet. Its would continue to be a BUY for sometime to come.

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