The net profit of Bharti Airtel fell for the tenth straight quarter, declining by 37 per cent to Rs.762.20 crore in the April-June 2012 quarter as stiff competition squeezed margins.

The company’s net profit stood at Rs.1,215.20 crore in the same period last fiscal.

Though Bharti Airtel has gained subscribers from smaller rivals, including Loop and S Tel (whose licences were cancelled by the Supreme Court), lower average revenue per user (ARPU) continued to trouble the company.

The ARPU in the reported quarter stood at Rs.185 against Rs.190 a month in the same period last year and Rs.189 in the January-March 2012 quarter. As on June 30, 2012, the company had 187.3 million mobile customers on its network, of which 5.1 million were 3G customers.

“Sustained hyper competition has driven this industry to become structurally defective with abnormally high rotational churn. The industry is witnessing high levels of gross customer additions, resulting in net additions of less than 10 per cent. This has a significant bearing on the telecom industry’s profitability,” Bharti Airtel, on Wednesday, said in a statement.

Total revenues were, however, up by 14 per cent to Rs.19,350 crore in the quarter from Rs.16,975 crore in the first quarter ended June 30, marked by growth of 31.5 per cent in Africa and 44.2 per cent jump in mobile data revenues from India.

“Telecom revenues in India have been depressed due to hyper-competition and recent regulatory and tax developments. Despite these adverse developments, Airtel has kept its focus on network expansion, market investments, superior customer experience and new product innovations,” Bharti Airtel Chairman and Managing Director Sunil Bharti Mittal said. The company said the revenues in India during the quarter were impacted by two significant changes — TRAI guidelines around processing fees, which restrict sales of “combo packs”, and a hike in service tax from 10.3 per cent to 12.36 per cent, effective April 1.

The service tax hike made all telecom services dearer by nearly 2 per cent, with the entire additional levy being passed onto the exchequer.

Bharti Airtel CEO Sanjay Kapoor, however, said during an investor call that an alternative strategy would be worked out to counter this impact.

Bharti Airtel shares, on Wednesday, plunged about 6.60 per cent at Rs.274.40 on the BSE.

Mr. Kapoor said Airtel added 9.4 billion minutes during the quarter, taking the total minutes on network at 274.6 billion.

He added that the company had gained market share and was the second largest beneficiary of mobile number portability.

On the public offer of its telecom tower unit Bharti Infratel Ltd. (BIL), Mr. Kapoor said it was subject to market risks and regulatory approvals.

IPO

Bharti Airtel has appointed a Committee of the Board of Directors to consider the IPO of BIL by selling up to 10 per cent stake.

Bharti Airtel may use the IPO proceeds to fund its debt. Revenues from African operations increased by 32 per cent to Rs.5,758.60 crore, which helped “lift the overall consolidated growth of the company.”

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