Bharti keeps line with MTN open
July 23, 2009
New Delhi - India's top mobile company, Bharti Airtel, reported Thursday that first-quarter net profit jumped 24 percent and said it was still in merger talks with South Africa's flagship MTN cellular group.
Bharti said net profit for the three months to June 30 rose to 25.17 billion rupees (R4.03 billion) on revenues that jumped 17 percent to 99.42 billion, helped by strong subscriber growth especially in rural areas.
"This good performance validates our rural thrust and investments in the past three years," said Bharti Airtel chairman and founder Sunil Bharti Mittal.
The profit was in line with analysts' forecasts.
Bharti would not elaborate on its talks with MTN, which the two firms say would create an "emerging market telecom powerhouse" with more than 200 million subscribers and $20 billion annually in revenues.
"We are still in talks -- that is all I can say," Akhil Gupta, deputy chief executive officer of parent company Bharti Enterprises, told reporters.
The two companies have said they will hold exclusive negotiations until July 31 for the cross-shareholding pact that would involve $10 billion in cash and $13 billion in stock.
Bharti, in which Singapore Telecommunications has a minority holding, would be the single largest shareholder, taking a 49 percent stake in the South African company. MTN would have an effective 36 percent stake in Bharti.
Bharti has been pushing rapidly into rural India, home to 70 percent of the country's nearly 1.2 billion population, in a fiercely competitive environment to drive growth.
The company posted 48 percent year-on-year growth in mobile customers to hit 102.37 million subscribers. Its total number of landline and cellular clients stands at 105.2 million.
The company is now "primarily focused" on moving into the rural market, said Bharti Airtel chief executive officer Manoj Kohli, adding rural mobile penetration was still just 10 percent.
About 60 percent of additional customers in the first quarter came from rural areas, the company said. - Sapa-AFP
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