Bharti Profit Beats Estimates on New Wireless Users

Bharti Airtel Ltd., India's largest mobile-phone operator, reported profit rose 37 percent, beating estimates, after winning the most customers in a market that's poised to overtake the U.S. as the second largest.

Shares climbed, poised for their biggest gain in four years, after net income advanced to 18.5 billion rupees ($460 million) in the three months ended March 31, beating the 17.6 billion rupee median estimate of eight analysts surveyed by Bloomberg. Sales rose 45 percent to 78.2 billion rupees, Bharti said today.

Bharti, controlled by Indian billionaire Sunil Mittal, widened its lead over Reliance Communications Ltd. by cutting rates and expanding its network across rural areas. The New Delhi-based company has also fended off competition from Vodafone Group Plc, which entered the Indian market in May.

``These companies continue to show strength and are adding new subscribers every month and the quarter,'' Pauli Laursen, a fund manager at Sydinvest Asset Management in Denmark, who owns Bharti shares as part of the $600 million in equities he manages, said before the earnings. ``That is growth that is not dependent on global growth. That is the reason why I like the sector.''

The potential for growth convinced Goldman Sachs Group Inc, Kohlberg Kravis Roberts & Co. and Temasek Holdings Pte to lead a combined $1.25 billion investment in Bharti's transmission unit. Bharti and Reliance sold stakes in their tower divisions, which hold generators, battery back-ups and other infrastructure, to fund extending their networks in the nation of 1.1 billion people.

Subscriber Additions

Bharti's subscriber additions of 6.8 million last quarter were 2 million more than second-ranked Reliance Communications. The carrier, which operates a network on the global system for mobile communications platform, also added 2.55 million more users than its nearest GSM rival, the Indian unit of Vodafone.

Calling rates as low as 2 U.S. cents a minute are helping Indian wireless operators win first-time users in a market where about one in five people own a mobile phone.

``The Indian telecom story is now entering the second wave of growth, which will come from rural India,'' Chairman Mittal said in a statement today.

Bharti rose as much as 8.5 percent, its biggest intraday gain since March 1, 2004, and was trading 53.9 rupees higher at 896.9 rupees at 10:48 a.m. on the Bombay Stock Exchange. The shares gained 8.2 percent in the year to March 31, compared with the benchmark Sensitive Index's 20 percent climb.