Date:03/08/11

Bharti chairman says telco competition in India abating, consolidation imminent

Consolidation in India's telecommunications industry is imminent even as competition eases and call tariffs stabilize, Sunil Mittal, chairman and managing director of Bharti Airtel Ltd. said. "Hyper competition in the market with 12-13 players, many of whom happened to be new entrants, is clearly abating," Mittal said in Bharti's annual report for the fiscal year ended March 31, put up on the company's website Monday. Bharti, the country's largest mobile-phone operator by users, expects stable tariffs to help in "the return of reasonable growth," Mittal said.
Revenue and profits at Indian telecom companies have suffered from fierce competition in the past two years, leading to call tariffs of less than one U.S. cent a minute. Newer entrants in the sector undercut established companies such as Bharti Airtel to add new users, often at a loss. However, increased scrutiny by investors has renewed the focus on profitable growth at the newer telecom companies, leading them to cease offering unprofitable low tariffs. On July 22, Bharti Airtel raised call charges for some prepaid schemes to control narrowing margins and because of the high cost incurred on buying bandwidth and rolling out services. Days later, Idea Cellular Ltd. and Vodafone Group PLC's local unit raised prices by at least 20% each. Mittal, however, cautioned that regulatory uncertainty continues over the allocation and pricing of second-generation radio bandwidth. The company is due to report results for the first quarter ended June on Wednesday.

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