Bharti Airtel

Mobile market leader Bharti AirtelLtd's(BRTI.NS) improving domestic operating performance raised hopes that the battered sector is taking a turn for the better even as the company posted a 14th consecutive quarter of falling profit.

Bharti Airtel, nearly a third owned by Southeast Asia's top phone carrier SingTel (STEL.SI), reported consolidated net profit fell about 10 percent to 6.89 billion rupees, hit by foreign exchange losses due to the weaker rupee and continued losses at its African operations.

But its stock jumped as much as 8.4 percent as investors were heartened by growth in key metrics such as average revenue per user and rates per minute as competition cools following a years-long price war in the crowded India cellphone industry.

"Things should be looking up as far as the sector is concerned in terms of earnings," said K.K. Mital, a portfolio manager at Globe Capital Market in New Delhi.

However, regulatory uncertainty remains a worry for an Indian mobile market that is the world's second-biggest by users. Bharti and others face several regulatory headwinds in Indian including high spectrum prices and a government demand that they pay billions of dollars in spectrum surcharges.

GRAPHIC: Bharti Airtel results

Still, Bharti and rivals such as Vodafone Group Plc's (VOD.L) Indian unit and Idea Cellular (IDEA.NS) are benefiting from easing competition as several smaller players were forced to shut or scale back after a court invalidated their permits.

The bigger carriers have in recent months raised prices by cutting discounts. Vodafone India earlier this month reported 13.8 percent growth in service revenue on better-than-expected growth in minutes and rate per minute.

The "market seems to be coming to some kind of rationality," Sarvjit Dhillon, chief financial officer at Bharti Airtel's parent, told reporters after the earnings release on Wednesday, adding regulation was "still an issue".

By 1.29 p.m. Bharti shares were trading 5.8 percent up. Rivals Idea Cellular and Reliance Communications (RLCM.NS) jumped 4.2 percent and 1.8 percent, respectively. The two companies report earnings on Thursday.

Bharti's net profit of 6.89 billion rupees beat the 6.57 billion rupees average estimate of analysts, according to Thomson Reuters I/B/E/S. Revenue for the quarter rose an annual 9 percent to 202.6 billion rupees, missing analyst expectations of 211 billion rupees.


Bharti, which entered Africa in 2010 with a $9 billion acquisition, has yet to make its operations there profitable and the debt it took on to fund the purchase has weighed on its earnings.



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