Bharti Airtel profits drop 30% as 3G disappoints

Bharti Airtel reported declining profits for the eleventh consecutive quarter as tax and depreciation costs eroded its revenue gains.

The operator flagged up a 17% year-on-year increase in third-quarter revenues, to 202.73 billion rupees ($3.74 billion), boosted by the addition of more than 25 million customers over the past year.

But net income dropped 30%, to 7.21 billion rupees, due to rising costs and the underperformance of its African operations.

Bharti Airtel reported declining profits for the eleventh consecutive quarter as tax and depreciation costs eroded its revenue gains.

The operator flagged up a 17% year-on-year increase in third-quarter revenues, to 202.73 billion rupees ($3.74 billion), boosted by the addition of more than 25 million customers over the past year.

But net income dropped 30%, to 7.21 billion rupees, due to rising costs and the underperformance of its African operations.

The bottom line was hit mainly by income tax expenses of 7.71 billion rupees, representing an increase of 57% since the third quarter of 2011, relating to charges on a dividend Bharti Airtel (New Delhi, India) collected from a joint venture.

The increase in customer numbers, which took Bharti Airtel’s total to about 262.6 million, might have offset the growing expenses were it not for a decline in average revenue per user (ARPU).

In India, where the operator has been introducing services in relatively poor rural communities, monthly ARPU fell by 3% to 177 rupees.

Take-up of recently launched 3G services has also been disappointing, even though Bharti Airtel slashed prices earlier this year in an effort to drum up interest.

Just 4 million of the company’s 186 million Indian customers were reported to be using 3G data services in the latest earnings release.

Overall data services contributed just 5.2% of mobile revenues last quarter, although the figure was up from 3.1% in the third quarter of 2011.

Bharti Airtel largely blames economic headwinds for its troubles in Africa, where ARPU fell 12%, to $6.40, between the third quarters of 2011 and 2012, and the net loss grew from 4.27 billion rupees to 5.39 billion rupees.