Telecom majors may see 28% rise in profit

Mumbai, July 16

Riding strong net additions in subscribers, the domestic telephony service providers are expected to report an average growth of 28 per cent in net profit for the first quarter ended June 30, 2008.

The top three listed mobile operators in the country — Bharti Airtel, Idea Cellular and Reliance Communications (RCom) are likely to post an average revenue growth of 39 per cent, according to reports from leading brokerage firms. This is because the industry is expected to add over 25 million subscribers in the previous quarter, thereby, taking the wireless subscriber base to 276 million, Mr Himanshu Shah, analyst with Religare Securities, said in a recently released report.

Capex spend

The momentum in subscriber additions continues to be strong primarily driven by better coverage and fierce competition on the tariff front. However, the profit growth on a sequential basis is expected to be flat because of higher interest and depreciation costs towards capex funding.

The sector is undergoing a capex-intensive cycle with launches in new circles and expansion in the existing circles, each player trying to grab market share ahead of launch of services by the new players, Mr Shah said in the report.

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