With call rates lower than ever before, handset prices starting at Rs 660, and operators expanding their networks to small cities and rural areas, the mobile subscriber base is growing at a phenomenal rate. More than 8 million subscribers are being added every month. At end-June 2008, the total mobile subscriber base in the country was about 287 million, 55 per cent higher than what it was 12 months ago.

However, the recently released financial results for the quarter ended June 2008 show that the robust growth in subscriber base has not uniformly translated into solid financials for all telecom companies. While companies like Bharti Airtel and GTL posted good financial results, the performance of telecom operators like Reliance Communications (RCOM) and Mahanagar Telephone Nigam Limited (MTNL) was below expectation. tele.net takes a look at the financial performance of some of the major telecom companies...

Bharti Airtel

Riding on the back of the highest quarterly net customer addition of 7.5 million and the lowest churn rate of about 3.8 per cent in the prepaid segment, Bharti Airtel posted strong financial results for the AprilJune 2008 quarter. It registered total consolidated revenues of Rs 84.83 billion, an increase of 44 per cent compared to the corresponding quarter of 2007-08.

Net income increased by 34 per cent to Rs 20.25 billion, while the net income margin dropped to 23.9 per cent from 25.6 per cent in April-June 2007. The margins for the mobile business declined to 30.7 per cent from 35.4 per cent in the previous quarter (January-March 2008). The fall in margins was largely a result of Bharti's decision to cut tariffs.

Average revenue per user (ARPU), affected by lower tariffs, decreased by 2 per cent from Rs 357 in the previous quarter to Rs 350, and by 10 per cent when compared to the corresponding quarter of the previous year. On the other hand, minutes of usage (MoU) went up by 5 per cent to 534 minutes from 507 minutes in the January-March 2008 quarter. In effect, the decrease in ARPU was negated by the increase in MoU. Meanwhile, earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 44 per cent to Rs 35.22 billion from Rs 24.47 billion in April-June 2007.

Bharti Airtel's overall customer base crossed 71.7 million during the quarter, with the average monthly addition being about 2.5 million. The company accounted for about 30 per cent of the total wireless subscriber additions in the country over the quarter. With a 24.2 per cent market share, Bharti retained its leadership position in the wireless market.

Idea Cellular

Idea posted total revenues of Rs 21.81 billion for April-June 2008, up by 47 per cent from Rs 14.78 billion in the corresponding period of the previous year. Profit after tax declined by 14.7 per cent, or Rs 152 million, to Rs 2.93 billion, while EBITDA increased by 40.2 per cent to Rs 7.2 billion. Compared to the January-March 2008 quarter, EBITDA increased by 6.9 per cent. The decline in profits was mainly on account of foreign exchange fluctuations as well as the expiry of the 2 per cent concession in licence fee granted to Idea for its seven circles.

The acquisition of the BK Modi Group's 40.8 per cent stake in Spice Communications for Rs 27 billion boosted Idea's subscriber base. Over the quarter, the operator added 3.19 million subscribers, which increased its subscriber base to 27.19 million.

The Aditya Birla group company is expected to post higher net profit for the July-September 2008 quarter, when its account sheet would reflect the funds put in by two investors –­ Telekom Malaysia and Providence Equity Partners. The former will buy stake in Idea for $1.7 billion, while the latter will invest $650 million.

Reliance Communications

RCOM, which largely operates in the CDMA segment, disappointed its shareholders by posting lower-than-expected profits. Net profit for the April-June 2008 quarter, at Rs 15.12 billion, showed negligible growth over the January-March 2008 quarter. Net profit in the April-June quarter of 2007 was Rs 12.21 billion. Revenue, at Rs 53.22 billion, also grew marginally over the previous quarter, and failed to meet market expectations. On a year-onyear basis, revenue grew by 23.7 per centfrom Rs 43.04 billion.

Over the past few quarters, RCOM has been reducing the number of free minutes offered under some of its tariff plans.Thus, the company's average realised revenue per minute has been more or less steady throughout the past year. Tariffs have been going down across the industry, as a result of which ARPU in the reporting quarter declined by as much as 25 per cent over the corresponding quarter in 200708. Revenue per minute, which had been stable in the past, fell by around 10 per cent to Re 0.66. This was due to lower PCO national long distance rates as well as cuts in mobile tariffs.

RCOM's operating margin fell by 130 basis points over the quarter. However, this may not be a major cause of concern for the company as the dip was a result of the one-time integration cost incurred by RCOM for acquiring Vanco and Yipes.The operator will derive the benefits of the two acquisitions from the JulySeptember quarter onwards.

Going ahead, industry analysts estimate that RCOM's ARPUs will increase once the company rolls out GSM and high speed data services. Pan-Indian GSM services are expected to be launched by the end of 2008-09, and will allow RCOM to compete better with rivals Bharti Airtel and Vodafone Essar. The company has drawn up a $6 billion investment plan for the year, a large part of which will be for GSM services.

The company is trying to fuel growth by expanding its value-added services portfolio. Further, the acquisition of Vanco and Yipes is likely to bring in global enterprise clients, with average contracts of $100-$130 million, spread over five to seven years.

Spice Communications

Spice Communications, formerly led by B.K. Modi, reported a net loss of Rs 1.36 billion for the quarter ended June 2008, as compared to the Rs 4.2 million profit in the corresponding quarter of the previous year. Total income increased by 21 per cent to Rs 3.25 billion from Rs 2.57 billion.

MTNL

MTNL's net profit for the April-June 2008 quarter grew by 15 per cent to Rs 1.15 billion from Rs 1 billion in the corresponding quarter of the previous year. Revenues, however, remained largely flat, rising marginally from Rs 12.8 billion to Rs 12.88 billion. Income from mobile services increased by 3.66 per cent from Rs 2.16 billion to Rs 2.24 billion.

The company added 195,865 wireless customers and 13,183 broadband customers during the quarter. It also announced a 10 per cent dividend, which will take the total dividend pay-out in 2008-09 to 40 per cent. Due to wage revisions, staff expenses for the quarter grew from Rs 4.27 billion to Rs 4.5 billion.

Tata Communications

For the quarter ended June 2008, Tata Communications recorded a 11 per cent decrease in total income to Rs 9.21 billion from Rs 10.35 billion in the corresponding quarter of the previous year. Net profit also came down by 6 per cent to Rs 983.4 million from Rs 1.04 billion.

During the quarter, Tata Communications entered into an agreement with two South African state-owned companies –­ Eskom and Transnet –­ to acquire their 30 per cent stake in Neotel, one of the largest network operators in South Africa. After the transaction is completed, Tata Communications, along with Tata Africa Holdings, would hold 56 per cent stake in Neotel. Tata Communications also entered into an equity joint venture with the shareholders of China Enterprise Communications (CEC) to acquire a 50 per cent stake in CEC.

GTL and GIL

Both GTL Limited and GTL Infrastructure Limited (GIL), subsidiaries of the Global Holdings Corporation Group, posted higher revenues for April-June 2008 compared to April-June 2007. However, only GTL posted profits. GTL's revenues increased by 2.84 per cent from Rs 4.07 billion to Rs 4.19 billion, and GIL (according to unaudited results) recorded a significant 155 per cent rise in revenues, from Rs 180 million to Rs 457 million.

GTL recorded a 10 per cent rise in gross profit from Rs 960 million in the April-June 2007 quarter to Rs 1.05 billion in the reporting quarter. Net profit rose by 1.99 per cent from Rs 320 million to Rs 326 million over the same period. The growth in gross profit margin was largely due to an increase in revenue from overseas operations and from the network planning and design, professional services, and operation and maintenance businesses.

GIL, on the other hand, recorded losses of Rs 31.9 million for April-June 2008, a steep decline from the profit of Rs 100.7 million in the corresponding period of the previous year.