[November 16, 2009] Airtel loses top slot in SingTel profit charts Tweet NEW DELHI, Nov 13, 2009 (The Economic Times - McClatchy-Tribune Information Services via COMTEX) -- The ongoing tariff war among mobile operators in India over the past three months, which has had a major impact on both the profits and revenues of the telecom sector, has resulted in Bharti Airtel being replaced by Indonesia's Telkomsel as the largest contributor to Singapore Telecommunications' (SingTel) profits for the first time in at least eight quarters. These figures were released on Wednesday, a day before the Singapore communications major is due to invest Rs 240 crore as part of a Rs 3,000-crore, three-installment investment that will see its holding in the Indian company rise by 1.52 percent over the next 18 months. SingTel is Bharti Airtlel's single-largest shareholder, which directly and through holding company Bharti Telecom holds about 30.5 percent in the company. It was actively involved in Bharti's bid to forge a partnership with South African telco MTN and was slated to part-fund the deal by investing $3-4 billion in the company, though there is no official confirmation of these figures. Analysts, however, are confident that Bharti Airtel would continue to remain a top player that contributes to SingTel's bottom line. India is extremely important to SingTel and the proof is that it is increasing its stake in Bharti. The fact that Bharti's profits may be under pressure for a quarter or two does not dilute its importance in the SingTel portfolio," said Jigar Shah, who heads research for the Indian operations of Singapore-based KIM ENG Securities. The Singapore-based communications major holds significant stakes in six telecom companies-Bharti Airtel, Telkomsel, Thailand's Advanced Info Service, Pakistan's Warid Telecom, the Philippines' Globe Telecom and Pacific Bangladesh Telecom. So far, the Indian operator was the largest contributor to SingTel's kitty. In addition to being edged out by Telkomsel, Bharti's contribution to SingTel's profits has also come down on a sequential basis. For the quarter ended September '09, Bharti's contribution to SingTel's bottom line was S$236 million compared with S$272 million in the previous quarter (June '09). Telkomsel's contribution increased to S$252 million in September '09 against S$245 million in June '09. Ironically, Bharti's share towards SingTel's profits has come down despite the Indian telco adding twice the number of customers as that of Telkomsel during the last quarter. At the same time, a fourth of SingTel's profits for the quarter ended September '09 has come from India. Again, on a year-on-year basis, Bharti's contribution to SingTel's profits was up by a little over 26 percent. 'The fact that Telkomsel has contributed more this quarter has to be seen in context. In the long run, India offers far more growth potential, its market size is far greater than Indonesia's, and margins here may be much higher. When you look at the relevance of the Indian market, a single quarter's figures are irrelevant," added Mr Shah. SingTel too has acknowledged that despite a robust performance from its Indian allay, competition in the domestic market has impacted Bharti's performance. "Bharti added 33 million mobile customers, an increase of 43 percent from a year ago, to 110.5 million as on September 30, 2009. However, operating revenue growth slowed to 9 percent and both average revenue per user (ARPU) and minutes of usage (MOU) declined as a result of intense competition and new players entering the Indian mobile market," SingTel said in a statement when declaring its quarterly results on Wednesday. Last month, Bharti had announced that its net profit rose by a lower-than-expected 13 percent to Rs 2,321 crore in the quarter to September on a 9 percent rise in sales at Rs 9,846 crore. On a sequential basis, revenues were down 0.9 percent while profits fell 7.8 percent. An analysis of Bharti's quarterly report for the three months ended September '09 also reveals that its revenues grew at their slowest pace in six years, market share shrank and the pace of customer addition eased. Over the past three months, Bharti has been forced to cut STD tariffs after the likes of Reliance Communications joined the tariff war a month ago by offering to bill customers at only 50 paise per call. It also recently launched the per-second billing plan, a practice started by Tata DoCoMo and copied by all other operators. To see more of The Economic Times, or to subscribe to the newspaper, go to http://economictimes.indiatimes.com Copyright (c) 2009, The Economic Times, India Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. [ Back To TMCnet.com's Homepage ]