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Bharti Tele: Powered by mobile biz

Krishnan Thiagarajan

THE mobile business segment continues to be a strong driver of the financial performance of Bharti Tele-Ventures (Bharti) for the quarter ended March 31, 2004.

This segment accounted for 64 per cent of the total revenues, 60 per cent of operating profits and 65 per cent of profit before interest and tax of Bharti in the latest quarter. The balance was accounted for by fixed line, long distance and group data services.

The key highlights of the mobile segment of Bharti in the latest quarter vis-a-vis the third quarter of 2003-04 are:

On a sequential (quarter-to-quarter) basis, the net customer additions witnessed a robust growth of 14 per cent in the latest quarter, up from 2 per cent in the preceding quarter. Over 1 million customers, out of an overall customer base of 6.5 million as of March 31, 2004, were added in the latest quarter alone. In the net additions to the GSM customer base, Bharti's market share stood at 24.1 per cent, up marginally from the October-December quarter. And in the net additions to the total mobile (GSM+CDMA) customer base, Bharti's market share improved to 19.6 per cent from 16.8 per cent over the same period.

But the robust net additions to customers have come at a price. The average revenue per user (or ARPU) has fallen by 15 per cent to Rs 1,128 in the post-paid segment and by 3 per cent to Rs 337 in the pre-paid segment. The reduction in ARPU can be related to the launch of the Sachin Invitation Plan (at a rental of Rs 150 per month) and reduced roaming tariffs. On the positive side, this has led to an increase in the post-paid net additions to total customer additions at 35 per cent, up from 26 per cent in the last quarter. In the overall customer base, 21 per cent were post-paid and the balance 79 per cent were prepaid subscribers.

While the revenues from the mobile segment grew by 15 per cent on a sequential basis, the operating profit (or EBITDA) remained flat during this period. Reflecting this trend, the operating profit margin declined by 4.7 percentage points to 32.15 per cent on a sequential basis. The decline in margins were attributable to a combination of factors. These were a fall in roaming revenue on account of a steep reduction by Bharti's competition, higher interconnect charges as the new IUC regime came into effect from February 1 and enhanced selling expenses on the launch of `Easy Recharge' prepaid cards.

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