Business

Bharti Airtel hit by mobile phone price wars

A man on a mobile phone
Image caption The market in India is becoming increasingly competitive

A "hyper-competitive" market meant profits at India's biggest mobile phone firm, Bharti Airtel, slide by 32% in the three months to the end of June.

Bharti suffered after a price war between 14 operators led to rates being slashed.

It reported a net profit of 16.82bn rupees ($361m; £230m), down from 24.75bn rupees a year earlier.

But Bharti's chief executive in India said there were "encouraging" signs that the price battle was stabilising.

"I'd say the worst is over. Cutting rates further would be suicidal" added Sanjay Kapoor.

African model

Bharti's average revenue per user - the industry's key measure of profitability - slipped by 23% year-on-year.

The firm, which has more than 20% of the Indian market, also lost about 2.2bn rupees on unfavourable currency exchanges.

The fierce competition at home, as well as increasing market saturation, led Bharti to take a step into the emerging African market earlier this year - paying $10.7bn for the African mobile operations of Kuwait-based Zain.

Analysts say the firm, which was a pioneer for low-cost telecoms in India, will have to slash Zain's high cost base, win subscribers and encourage them to talk more using cheaper tariffs.

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