Telecom operators expect to post robust Q3 results

Riding on increasing subscriber growth and the spectrum issue not withstanding, telecom service providers in the country are expected to post robust results in the third quarter of the current financial year.

Leading telecom operator Bharti Airtel is expected to post a 42 per cent increase in net profit and a 40 per cent rise in net sales.

The company posted a net profit of Rs 1,215 crore during the comparable quarter of the previous financial year, according to Emkay Shares and Stock Brokers.

Likewise, Reliance Communications is expected to post a 45 per cent rise in net profit from the Rs 924 crore recorded during the previous financial year. The Anil Ambani group company is expected to record a 32 per cent increase in net sales during the reporting quarter.

Idea Cellular, the Aditya Birla group company, is slated to record an increase of 120 per cent in net profit from the Rs 114 crore posted during the comparable quarter of the previous financial year. The company would record an increase in net sales of around 53 per cent.

"The good subscriber addition in the country, of around 8 million users per month, is translating into revenues and profits for the mobile operators. The third quarter, being the season of festivals, has also registered an increase in minutes of usage," according to Sumit Modi, a telecom analyst with Emkay Shares.

Festivals such as Diwali, Eid, Durga Puja, Christmas and New Year all fall during the three-month period of October to December, leading to an increase in usage during the quarter.

The three listed companies are expected to announce their results by the last week of this month.

The total number of subscribers in the country stands at around 260 million as of November 31, 2007, of which 214 million are mobile users.

Even though the increase in mobile subscribers for December is yet to be released, analysts expect the industry to add a minimum of 8 million users during the month.

According to Neha Gupta, senior research analyst, Gartner, the third quarter results would also reflect the run-up to the fourth quarter, which is the most important quarter for the companies.

"Traditionally, telecom companies post their best results during the third quarter. Apart from it being the festive season, telecom companies also provide bonanzas, roll out freebies and set ambitious targets during the quarter," she added.

Telecom analysts were expecting the trend to continue in the last quarter too, with the listed companies expected to post robust growth.