Telecom major Bharti Airtel posted an increase of 42% YoY in its revenues to Rs6,964 crore in the December quarter (Q3).This was backed by robust growth in mobile revenues, which grew 49.3% YoY.

Net subscriber additions, at 63.9 lakh during Q3, was the highest for any quarter. The total customer base stood at 5.7 crore as on December 31, 2007, up 70% YoY, giving the company a 23.6% market share.

Notably, the average revenue per user has been dropping continuously over the quarters and stands at Rs358, indicating intense competition in the segment.

The non-mobile, broadband and telephone services (B&T) and enterprise services grew by 23%, 22% and 34%, respectively.

Bharti’s earnings before interest, tax, depreciation and amortisation in Q3 was Rs2,963 crore, up 48% YoY, translating into an operating margin of 43%.

This was primarily on account of the good upside in B&T service margins from 27% to 43%. Net profit grew 42% in line with robust topline and operating profit growth, to Rs1,722 crore.

Going forward, the mobile segment will be a volumes story, while the other segments have good scalability prospects as new technologies like IPTV and DTH gain steam and become major business drivers.

Divestment of telecom tower business is also a huge positive as it has good demand and unlocks value for the company. Revenues are expected to kick in from the next quarter.

On the flipside, telecom companies are facing the spectrum crunch and lack of policy related clarity over the same. Till more spectrum is released, capex for these companies continues to be higher. Also, with the introduction of mobile number portability, competition will take a new dimension and margins are bound to be affected.

At a PE of 26, the fundamentals are in place. However, given current market conditions, investors may be better off booking partial profits and holding the rest for long-term rewards.

 

Source : Dna