India's largest mobile operator, Bharti Airtel, reported that its net profit for the quarter ended June 30 was down 37 percent to 7.62 billion rupees (US$135 million), even as its revenue and number of customers grew in India, Bangladesh, Sri Lanka and 17 countries in Africa.
Telecom revenue in India, its largest market, has been depressed due to "hyper-competition and recent regulatory and tax developments," including a hike in tax levies, the company said in a statement. Falling average revenue per user (ARPU) and high debt have also dragged down Airtel's profit.
The company had 194 million subscribers in India, Bangladesh and Sri Lanka at the end of the quarter, of which about 187 million were in India.
Subscriber additions in India no longer translate into large revenue, and can in fact be a drag on profit as operators expand into rural markets, and also address the trend for users to have more than one connection, said Kamlesh Bhatia, research director at Gartner.
The uptake for data services in India has also been far lower than was expected. Operators like Airtel have rolled out 3G services, but these haven't taken off, Bhatia said. Airtel has also rolled out 4G services in two Indian cities, Bangalore and Kolkata, but it may be too early to evaluate consumer interest in the TD-LTE service, he added.
Airtel's ARPU in India was down by 3 percent year on year, to 185 rupees per month.