India's top mobile services firm, Bharti Airtel Ltd, said on Friday quarterly net profit beat forecasts, surging 79 percent, as its network and user base expanded, sending its stock up 5.1 percent to a record.
Shares in Bharti, India's most valuable telecoms firm with a market value of $21.1 billion, rose as much as 25.65 rupees to an all-time high of 530 rupees. More than 486,880 of its shares changed hands, the highest volume in a month.
The stock later closed at a record 527.3 rupees, up 4.55 percent, in a strong Mumbai market. Bharti, which enjoys a 4.24 percent weightage in the main index, was the top gainer on the 30-issue marker.
"I believe the momentum in customer addition should continue. I have no reason to believe growth in subscribers and revenue will fall," Akhil Gupta, joint managing director, told reporters.
India, Asia's fourth-largest economy and world's fastest growing mobile market, is in the midst of a wireless services boom as it adds upwards of 6 million new mobile customers - roughly equal to the population of Israel - each month.
Bharti, 30.8 percent owned by Singapore Telecommunications, said consolidated profit for the fiscal second quarter to end September rose to 9.34 billion rupees ($206.9 million), up from 5.21 billion a year ago, and 7.55 billion in the first quarter.
That compared with a median forecast of 8.47 billion rupees from six analysts. Bharti's profit beat even the most optimistic of predictions. A larger economy of scale pushed EBITDA margins up to 39.1 percent from 37.7 percent a year. "These numbers are too good. But the best is yet to come," said Deven Choksey, chairman at K R Choksey Shares and Securities.
Gupta said India's mobile services sector was likely to continue to add around 5.5 million new users every month as carriers like Bharti, Reliance Communications and state-run Bharat Sanchar Nigam Ltd increase coverage. "This growth is not dependent on top 20, 30 or 40 cities but on thousands of small cities. That's what makes it sustainable."
India, where mobile services began in the mid-1990s, has more than 131 million GSM and CDMA customers, comfortably exceeding the combined populations of Germany and Spain.
The number will grow substantially as networks expand into communication starved rural areas where two-thirds of India's 1.1 billion people live. Bharti's average revenue per user in the July-September quarter fell to 438 rupees from 441 rupees in the previous quarter, but minutes of usage rose to 451 from 441.
New Delhi-based Bharti said earlier this month that at the end of September its mobile base was 27.06 million, up 92.3 percent from a year earlier, while total customers including fixed-line users rose an annual 81.9 percent to 28.7 million.
Bharti, 30.8 percent owned by Singapore Telecommunications, added 3.99 million new GSM mobile users during July to September, compared with 3.5 million the previous quarter.
In August, Bharti awarded $1 billion GSM equipment contract to Swedish telecoms gear maker Ericsson as a part of its ambitious nation-wide expansion plans, which will cost nearly $2 billion in the year to March 2007.
Bharti's rival - unlisted BSNL recently awarded a 63.5 million GSM line contract, estimated at $6.8 billion, to Ericsson, Nokia and ITI Ltd to soak up growth.
Bharti already has a network spanning all 23 zones that make up India's telecom sector. Each zone is roughly equal to a big state like Gujarat or a large city like Mumbai. Gupta said Bharti was planning to cover all census 5,200 towns by end of March from 4,357 and thousands of surrounding villages now. Bharti's stock rose 26.7 percent in the past quarter compared with the 17.4 percent rise on the main index.
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