Acquisition of Zain Africa hurts Bharti Airtel’s profit

India based telecoms company, Bharti Airtel says its income before taxes for the first quarter 2011   which ended June 30, 2011 came in at $384 million as against the $445 million it recorded during the same period in 2010 fiscal year.

The company’s net income for the 2011 quarter stood at $272 million from $361 million last year during the same period.

According to Bharti Airtel, the acquisition of Kuwait-based telecoms company, Zain, contributed to a fall in its profit.

Airtel bought the assets of Zain in Africa for a record sum of $10.7 billion in June 2010. The World Bank described the acquisition as one of the largest in the world that year.

Zain received the final payment of $700 million from Bharti Airtel of India for the sale late June 2011, according to a statement from the company.

“On a year-on-year basis the income before taxes dropped, mainly caused by the Africa acquisition,” Bharti Airtel currently with overall subscriber base of 230.8 million across 19 countries including Ghana, said in its first quarter financial results released August 3, 2011.

Its 3G investments in India and 3G license fee amortization of $36 million also affected the company’s profits.

But consolidated total revenues for Bharti Airtel during the 2011 first quarter grew by 38.6% to $3,796 million over last year with revenues from Africa hitting $979 million.

“Bharti Airtel has started this fiscal year on a stable note. Revenue growth has been steady across all geographies, with Africa recording a healthy sequential growth of approximately 6%, and annual growth of 21%,” Mr. Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel Limited, said in a statement.

By Ekow Quandzie