Fixed-phone firms fare better

Bharti, MTNL, TATA Tele (Maharashtra), VSNL book higher operating profit than last year

The four listed fixed telephony service providers Bharti Televentures (BTV), Mahanagar Telephone Nigam Ltd (MTNL), Tata Teleservices (Maharashtra) Ltd and Videsh Sanchar Nigam Ltd (VSNL) witnessed a higher operating profit, compared to the increase in income during the first quarter of 2004-05.

The combined operating profit of the four companies increased 35.3 per cent to Rs 1,300 crore during the first quarter of 2004-05, compared to Rs 961 crore in the corresponding quarter in the previous financial year. This increase was higher than the increase in income, which grew at 19.1 per cent to Rs 4,158 crore in Q1 of 2004-05, over Q1 2003-04.

The combined operating profits grew at a higher rate than the income during the period because of a lower 13 per cent year-on-year increase in cost of sales, which stood at Rs 2,851 crore in the first quarter of 2004-05, according to ICRA Information, Grading and Reasearch Service (INGRES).

The research agency said that the increase in operating margin from 27.6 per cent during Q1 2003-04 to 31.3 per cent during Q1 2004-05 was possible due to significant improvement in the operating margins of BTV and VSNL.

BTV reported a 111.7 per cent year-on-year increase in operating profit to Rs 612 crore during the first quarter of 2004-05.

The telecom major also witnessed an increase in operating margin to 35.9 per cent during Q1 2004-05, from 27.9 per cent in the corresponding quarter in the previous financial year.

"Higher number of subscribers and the economies of scale resulting out of it, enabled BTV to report higher profits," the research agency said.

Among the other players, VSNL also witnessed an 148.2 per cent year-on-year increase in operating profit in Q1 2004-05. Its operating margin also improved from 10.8 per cent in Q1 2003-04 to 28.3 per cent in Q1 2004-05.

This increase in operating profit and operating margin were due to a higher decline in network and transmission costs than in prices, INGRES said.

MTNL and TTM, however, witnessed decline in operating margin.

MTNL's operating margin declined from 37.2 per cent in Q1 2003-04 to 31.6 per cent during Q1 2004-05 because of higher employee expenses, TTM witnessed a steep decline in operating margin from 20.9 per cent in Q1 2003-04 to 1.5 per cent during Q1 2004-05.

This decline was because of higher network and marketing expenses, INGRES said.