Partners in profit

When the net profits of Bharti Airtel for the first quarter of 2007-08 doubled, it wasn’t just domestic investors who were celebrating. Also cheering the feat was Singapore Telecommunications (SingTel). After all, South East Asia’s largest telecom company has a 30.5 per cent stake in Bharti Airtel. Beating the estimates of more than 10 brokerage houses, Bharti’s earnings in the quarter ended June 30 doubled to a record $372 million.

Price cuts and expansions in rural areas brought in 5.56 million new customers— the most ever for the company in a quarter. A Reuters poll of 11 brokerages had forecast a net profit of Singapore $870 million for Bharti, which had 42.7 million mobile subscribers as of end-June.

Bharti, which gets a majority of its revenue from its GSM mobile users, provides services in all the 23 zones that make up India’s telecom market. But it wasn’t just Bharti that was defying forecasts this quarter. Partner SingTel was estimated to earn a profit of S$870 million, based on the median estimate of six analysts surveyed by Bloomberg News.

SingTel went on to report a net income of S$927 million. Reason for beating expectations: The record earnings from at its Indian unit. “The pre-tax contribution from Bharti was up 133 per cent to S$211 million from a year ago,” reveals a SingTel spokesperson.

Chua Sock Koong, Chief Executive Officer, SingTel, who took over in April, is chasing a strategy of investing in emerging markets. In June this year, he bought a 30 per cent stake in Pakistan’s Warid Telecom International LLC and may work with Abu Dhabi Group to expand its business in the UAE. “SingTel’s focus remains on Asian markets with large populations and low telephone penetration,” Chua had said at a briefing in Singapore earlier this month.

In the June-ended quarter, SingTel had added 12.6 million subscribers, thanks largely to gains in India and Indonesia. “Going forward, the pretax contributions from our regional mobile associates are expected to grow at double-digit level, with Bharti, along with our associate in Indonesia, Telkomsel, accounting for most of the growth,” says the SingTel spokesperson. Over to Bharti Chairman Sunil Mittal.