Financial year 2007-08 closed on a positive note for most telecom companies, with the January-March quarter marking solid growth. Except Spice Communications, which registered a loss, several listed telecom companies, including Bharti Airtel, Reliance Communications (RCOM), Idea Cellular, Mahanagar Telephone Nigam Limited (MTNL) and GTL Limited posted positive financials in the reported quarter.tele.net reports the financial results of these companies for the quarter ended March 2008 as well as for 2007-08...

Bharti Airtel

Driven by strong subscriber additions and increasing minutes of usage (MoU), Bharti Airtel yet again registered better-thanexpected financial results for the quarter ended March 2008. The company added about 7 million subscribers during this period, while the MoU increased by about 7 per cent from 478 to 507. The growth in MoU enabled the operator to maintain its average revenue per user (ARPU) at the same level over the quarter. Bharti's net profit rose by 37 per cent from Rs 13.53 billion in the quarter ended March 2007 to Rs 18.53 billion. Its total revenue increased from Rs 53.93 billion to Rs 78.19 billion.However, revenue per minute fell by 17.6 per cent owing to tariff cuts. The EBITDA margin also fell by 3.6 percentage points to 35.5 per cent.

According to the annual financial results declared by the company, revenues grew by 46 per cent in 2007-08 to Rs 270.25 billion from Rs 185.2 billion in 2006-07. This was accompanied by a 57 per cent rise in net profits to Rs 67 billion.

While 24.8 million subscribers were added during the year, ARPU fell by 12 per cent to Rs 357 in the first two quarters of the year. However, ARPU remained relatively stable at this level for the last two quarters.

In the mobile segment, revenue grew by 54 per cent, driven by an increase in MoU through innovative tariff schemes.The enterprise services segment, which is still picking up pace, recorded 28 per cent growth in revenue. In the telemedia services, steady subscriber additions led to a 27 per cent increase in revenue. The increase in revenue for the carrier business segment, which provides long distance and landing station connectivity, was less positive at 24 per cent, mainly on account of increased competition.

RCOM

Healthy growth across various business segments led RCOM to post a 46.8 per cent year-on-year rise in net profit for the quarter ended March 2008, from Rs 10.24 billion to Rs 15.03 billion. Net revenue increased by 35 per cent to Rs 53.11 billion from Rs 39.37 billion. However, ARPU dropped from Rs 339 per month in the quarter ended March 2007 to Rs 317, whilethe average monthly MoU per subscriber dropped from 449 to 430. According to RCOM, the drop in usage was a result of the reduction in the number of free minutes in some tariff plans. However, reduced free talktime resulted in the revenue per minute rising by 5.8 per cent.

The company recorded maximum growth in its broadband business, which grew by 54.5 per cent from Rs 3.3 billion to Rs 5.1 billion. While Bharti registered sequential double-digit growth in its wireless business, both in terms of revenue and profit, RCOM managed a mere 5 per cent growth in wireless revenue and a 6 per cent growth in profit.

For the year ended March 2008, RCOM's net profit grew by 70.8 per cent to Rs 54.01 billion from Rs 31.63 billion in 2006-07. Turnover increased by 31.8 per cent to Rs 190.68 billion from Rs 144.68 billion.

In order to narrow the gap between itself and Bharti Airtel, RCOM intends to spend up to $6 billion in 2008-09 on expanding coverage and rolling out a countrywide GSM network.

Idea Cellular

The company's net profit in the quarter ended March 2008 grew by 43.8 per cent on a year-on-year basis to Rs 2.76 billion.Revenue grew by nearly 51 per cent to Rs 19.72 billion, while ARPU increased by about 3 per cent from Rs 279 to Rs 287.MoU also increased by 7 per cent. The company attributes the strong growth to aggressive network rollout.

In 2007-08, Idea's subscriber base increased by 70 per cent to over 24 million, making the company India's sixth largest mobile operator. Compared to 2006-07, net profits more than doubled to Rs 10.42 billion. Revenue grew by 53 per cent to Rs 67.37 billion from Rs 43.87 billion.

MTNL

The state-owned operator announced a net profit of Rs 2.19 billion for the fourth quarter of 2007-08, a growth of 6.31 per cent over the corresponding period in the previous year. Total income increased from Rs 13.9 billion to Rs 14.63 billion.

For the year ended March 2008, MTNL registered a net profit of Rs 5.07 billion, an 8.8 per cent growth over Rs 4.66 billion in 2006-07. Total income fell to Rs 54.07 billion from Rs 55.82 billion.

Despite the increase in profit, the company's operations are limited compared to other operators as it is present in only two circles, Delhi and Mumbai.Moreover, not only does MTNL have to deal with a falling landline subscriber base, it also faces the difficulty of trying to scale up mobile operations with the two metros nearing saturation. To overcome this problem, the company has asked for a pan-Indian licence so that it can compete more effectively with private operators.However, MTNL does not seem anywhere close to getting the licence.

Spice Communications

B.K. Modi-controlled Spice Communications announced a net loss of Rs 365.06 million for the quarter ended March 2008. In the corresponding quarter of the previous year, the company had posted a much smaller net loss of Rs 146.67 million. However, total income increased by 38.57 per cent to Rs 3.09 billion from Rs 2.23 billion.

GTL/GIL GTL

Limited and GTL Infrastructure Limited (GIL), both subsidiaries of the Global Holdings Corporation Group, maintained their growth momentum in revenue as well as in profit during the quarter ended March 2008. GIL posted a 260 per cent increase in operating profit, which rose to Rs 225.7 million from Rs 62.6 million in the corresponding quarter of 2006-07. Revenue increased by 162.5 per cent to Rs 421.9 million.

GTL's gross profit for the quarter grew from Rs 967 million (24.4 per cent of revenue) in the last quarter of 2006-07 to Rs 1.17 billion (24.77 per cent of revenue).

On an annual basis, GIL's revenue from operations was Rs 1.24 billion in 2007-08 as against Rs 589 million in 200607, a growth of 110.17 per cent. Operating profit grew by 66 per cent to Rs 631.6 million from Rs 378.8 million. Over the year, GIL expanded its tower portfolio to 6,010 across 15 telecom circles.

Meanwhile, GTL registered a 308.96 per cent growth in net profit, which increased from about Rs 670 million to Rs 2.74 billion. Turnover increased from Rs 9.25 billion to Rs 17.71 billion.

Conclusion

With 75 per cent of the market still untapped, the revenue and profit graphs of most telecom operators are bound to move upwards, at least in the near future.However, the second wave of growth, coming from the rural areas, has brought in challenges in terms of lowering the already low ARPUs. This problem needs to be tackled efficiently. Nevertheless, industry analysts are confident that the current fiscal year will again see strong demand in all business segments, giving a further push to the toplines.