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Bharti Airtel suffers 50% drop in profit due to poor performance of Africa unit

 NEW DELHI: Bharti Airtel's net profit fell for the 13th straight quarter as it missed Street estimates to clock a 50% decline because of the poor performance of its Africa unit and a higher tax charge, even as the company's leadership remained upbeat and said the tide was turning for the troubled telecom sector.

Bharti Group Chairman Sunil Mittal said conditions had started to improve in the Indian market and pricing stability was returning to the sector. He added that there had been an improvement in the quality of customer acquisitions and that the company was witnessing consistent growth on the data front.

The time spent by
Bharti AirtelBSE 1.03 % customers on talking over the phone, described in industry parlance as minutes of usage, increased in India during the quarter ended March 2013. The company was able to arrest the decline in average revenue per customer, or ARPU, and was also successful in increasing its revenue market share.

Hike in call rates and newer rivals shuttering operations after the Supreme Court cancelled their permits helped the company arrest the decline in ARPU and increase revenue market share.

But analysts said future prospects of the country's largest telco remained cloudy as it stares at payouts to the tune of thousands of crores in regulatory fees and spectrum charges. The telco also faces the prospect of paying out billions of dollars for renewing its mobile permits from next year onwards.

"The company has been unable to solve its old problems. Add to it, the regulatory uncertainties and the various future payouts... its future is clouded," said Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities.

The company blamed losses from its Africa operations, higher deferred tax charge, higher interest outgo and depreciation costs as its net profit dropped 49.4% to Rs 509 crore during the quarter ended March 2013. Its net sales, however, increased 9.2% to Rs 20,448 crore.

For the full year ended March, Bharti's net income was Rs 2,276 crore, its lowest annual profit in seven years. Revenues were up 12.4% to Rs 80,311 crore.

Losses from the African operations grew 42.5% to Rs 486 crore during the March ended quarter as Bharti missed most of its targets in that market. "The growth in Africa was lower than we expected," admitted
Manoj Kohli, Bharti's chief executive for international operations.