Airtel Profit Declines on Higher Costs, Says Jio Weighed on Mobile Business

India's top telecom network operator Bharti Airtel Ltd reported a drop in second-quarter profit due to higher costs and said competition from a new carrier led to slow growth in the mobile business.

Wireless carriers such as Airtel are boosting capacities and spending billions of dollars to offer high-speed data services to users in India, the world's fastest-growing internet services market.

Bharti, in fact, bought $2.13 billion (roughly Rs. 14,231 crores) worth of airwaves in an auction earlier this month as competition from Jio, the telecom unit of India's richest man Mukesh Ambani's Reliance Industries Ltd, spurred a price war among operators to retain customers.

The company said its consolidated net profit declined to Rs. 1,461 crores ($218.59 million) for the three months to September 30 from Rs. 1,536 crores a year earlier.

Analysts had expected the wireless operator to report a profit of Rs. 1,369 crores, according to Thomson Reuters data.

Revenue rose 3.4 percent to Rs. 24,672 crores, while costs of depreciation on capital expenditure and airwaves amortization expenses increased nearly 17 percent to Rs. 4,956 crores. Higher interest payments weighed.

Jio's offering of free voice and data services to customers till December 31 also hurt.

The company's "mobile business has experienced a slowdown in growth due to free services being offered by a new operator", Gopal Vittal, managing director and chief executive for India and South Asia, said in a statement.

Bharti's revenue fell 3.5 percent on a sequential basis due to cheaper voice and data tariffs.

Average revenue per user for voice services declined 5 percent on a sequential basis to Rs. 132.

Losses from Africa operations narrowed to Rs. 610 crores from Rs. 1,103 crores due to divestment of units and sale of tower assets.

Bharti Airtel shares ended 1.7 percent higher ahead of results in a broader Mumbai market that fell slightly.

© Thomson Reuters 2016