Improved prospects in Africa and the launch of 3G services in India has brightened the outlook for Bharti Airtel after currency losses led to a bigger-than-forecast drop in quarterly profit.
India's wireless market - the world's second biggest and the fastest growing - has seen steady prices last year following cut rate competition which sent prices tumbling in late 2009 as firms including Vodafone and Reliance Communications wrestled for market share.
Shares in India's top mobile carrier, valued at about $26 billion, wiped out an early fall of 3.3 per cent and were up 3 per cent by 0510 GMT as analysts said the company's earnings outlook had improved with the launch of 3G services in India.
"My sense is on a three year horizon, this company should be hugely profitable because that's the time it requires to rejig its costs," said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services.
"If the company is able to get such substantial revenue growth, it shows the company has been able to manage the consolidation. Now, cost management is a much simpler problem."
Bharti, 32.2-per cent owned by Southeast Asia's top telecoms firm SingTel , aims to launch third-generation (3G) wireless services across all its 13 telecoms zones in India by March and expects the premium offering to help stabilise its average revenue per user (ARPU).
Bharti said on Wednesday consolidated net profit fell 41 per cent to 13.03 billion rupees ($286 million) for its third-quarter ended December, from 21.95bn rupees a year ago, based on international accounting standards.
Revenue rose 53 per cent to 157.56bn rupees from 103.05bn a year ago.
A Reuters poll had on average expected net profit to fall 26 per cent to 16.25bn rupees on revenue of 155.40bn rupees for the firm that operates in 19 countries across Asia and Africa with 199.6 million mobile customers at end-December.
But Africa remains a short-term worry for Bharti, where it acquired the loss-making telecoms operations of Zain in 15 countries in a $9bn deal in June to become the world's fifth-biggest wireless carrier.
"Our objective is to make the operations very profitable, revenue growth has picked up well," said Manoj Kohli, Bharti Airtel's CEO for international operations, referring to the company's Africa operations," Manoj Kohli, Bharti Airtel's CEO for international operations, told a news conference.
Bharti competes in India with 14 other companies.
Investors are awaiting the take-off of third-generation (3G) mobile services that would boost carriers' revenue from data in India where voice services contribute nearly 90 per cent of the revenue for cellular companies.
Bharti, which spent $2.7bn last year to buy 3G radio airwaves in an auction, recently launched the services in southern Karnataka state, whose capital is the technology hub of Bangalore.
The company hopes to cover 40 cities by March and expand the services to 1,500 cities and towns by a year later. Third-generation services facilitate faster Internet on mobile phones and let customers use services such as video calls.
The services are expected to boost mobile carriers' data revenue in a market where low-margin voice calls account for close to 90 per cent of the total revenue.
Bharti's monthly ARPU in India in the December quarter fell 14 per cent from a year ago to 198 rupees ($4.4). ARPU in Africa dropped to $7.3 in the quarter from $7.4 in the quarter ended in September 2010.
The company said it repaid debt of $415m taken for the rollout of third-generation mobile services in the December quarter, and incurred a one-time brand promotion cost of 3.40bn rupees ($75m).
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