Telecom Lead India: Around 50 percent dip profit margin and the recent scams have made Indian mobile market unattractive to global investors.
Profit margin issues will have a long term impact on India. However, India’s mobile market will bounce after some time, industry experts warned.
Net profit margin is giving an alarming picture to the mobile industry in India. “It is one of the lowest in the world. But India’s growing economic conditions has the potential to create a strong mobile market in the long run,” said Neeraj Arora – director Internet Business Solutions Group, Asia Pacific Japan and China, Cisco Systems.
Bharti Airtel’s net profit margin decreased to 3.6 percent in the second quarter of fiscal 2013 from 3.9 percent in first quarter and 21.4 in fiscal 2010.
India’s largest telecom operator’s net profit margin was 6 percent in 2011-12 and 21.4 percent in fiscal 2009-10.
Airtel’s rival Reliance Communications’ net profit margin decreased to 2 percent in second quarter of fiscal 2013 from 3.1 percent in the first quarter.
In fiscal 2011-12, Reliance Communications’ net profit margin was 4.6 percent and in fiscal 2009-10, it was 21 percent.
EBITDA, the most important parameter, also plummeted for both operators.
Airtel’s EBITDA decreased to 31.3 percent in Q2 2012-13 from Q1’s 30.2 percent. In fiscal 2010, Airtel’s EBITDA was 40.1 percent.
EBITDA of Reliance Communications increased to 31.5 percent in second quarter from 31 percent in first quarter. Its EBITDA declined from 39.3 percent in fiscal 2011 and 31.8 percent in fiscal 2012.
“Competition and scams affected the market potential. Lack of spectrum and long-term policies affected the image of India for global investors,” said Mike Short, past president of the IET and vice president – Public Affairs, Telefonica Europe.
On top of industry issues, ARPU created more concerns for the industry. Airtel’s ARPU decreased to Rs 177 in Q2 from Rs 185 in Q1. Reliance Communications’ ARPU increased to Rs 102 from Rs 98 during the same period.
Baburajan K
editor@telecomlead.com
