Call tariff, data services to help Bharti Airtel turn around?

Bharti Airtel on Thursday said consolidated net profit for the fourth quarter ended March 31 fell by nearly half, as the country's biggest telecom operator by subscribers continued to suffer from a high debt burden and losses at its African unit.

Net profit for the January-March quarter slumped to Rs 509 crore from Rs 1,006 crore a year earlier. This is the 13th successive drop in quarterly profit. Total revenue for the quarter grew 9.2 per cent to Rs 20,448 crore from Rs 18,729 crore.

For the fiscal year ended March (2012-13), net profit dropped almost 47 per cent to Rs 2,276 crore while revenue rose 12.4 per cent to Rs 80,311 crore.

The earnings are in contrast to the results reported by rival Idea Cellular recently. India's third-largest telecom operator by subscribers had posted a 40 per cent growth in net profit in the quarter through March to Rs 1,011 crore.

Bharti executives indicated that the company could increase call tariffs as part of efforts to boost profit.

The operator, along with Vodafone India and Idea Cellular, has increased tariffs a couple of times in the past one year. Bharti Airtel, however, has said in the past that the hike was not sufficient.

"We have cut back discounted minutes. We will keep looking at opportunities where discounted minutes can be reduced," Gopal Vittal, CEO of Bharti Airtel's India operations, said at an earnings press conference.

Bharti also has a debt burden of Rs 63,839 crore, mainly on account of borrowings to pay for spectrum in India and purchase the Africa operations of Zain Telecom for about $9 billion.

Revenue from Africa grew 21 per cent to Rs 20,044 for 2012/13. But the Africa operations have yet to turn profitable.

"Ghana and Tanzania saw double-digit growth, but central African countries are a bit slow," Manoj Kohli, CEO of Bharti's international business, said at the results conference. Kohli said the company will continue to purchase minority stakes to get control whenever it gets an opportunity in various markets.

The company also announced buying the 30 per cent stake it doesn't already own in Airtel Bangladesh from its partner Warid Telecom of Abu Dhabi.

Bharti Airtel's shares fell almost 10 per cent initially on poor results but recouped most of the losses later in the day.

DATA PLAY: THE ONLY WAY FORWARD

Bharti expects that its turnaround will depend on stabilising tariff at a higher price, and expects more money flowing in from data subscribers. At present, the company has 6.4 million users for its third-generation service for high-speed data usage. Idea Cellular has 5.1 million 3G users.

Bharti managed to increase its average revenue per user, or ARPU, from data services by 16 per cent from the December quarter to Rs 55 in the three months through March. The overall ARPU increased four per cent to Rs 193 in the same period. "Data continues to grow strongly," Vittal said. "That's a positive."

Kohli said that the game plan in Africa also will be to maximise data revenue. "We have the largest 3G network in Africa," he said. "Now, capex investment will happen in 3G."

Bharti's wireless broadband, or fourth-generation, services have yet to gather momentum. The company does not disclose its 4G subscriber base. Industry observers expect wireless broadband to be the next battleground where Bharti and billionaire Mukesh Ambani-led Reliance Jio will woo users.

The catch: Bharti has licences in eight service areas and Reliance has permits to operate in all of the country's 22 service areas.