India's top telecoms company Bharti Airtel reported Friday that its net quarterly profit plunged by an unexpected 72 percent in the three months to December, hit by punishing competition and soaring interest charges.
The profit drop to 2.84 billion rupees ($53 million) marked the phone giant's 12th straight quarterly fall and was well wide of analysts' forecasts of an eight billion rupee profit.
"Market conditions have been challenging in recent quarters due to pricing pressures and rising input costs," Bharti's billionaire founder and chairman Sunil Bharti Mittal said.
These have "put enormous pressure on the sector", he added.
Bharti, the world's fourth-largest operator globally, with 262 million clients, posted a 10.1 billion rupee profit in the same quarter last year, a company statement said.
"There are still big headwinds (for Bharti), it's not clear sailing yet," said Harit Shah, an analyst with Mumbai-based Nirmal Bang Institutional Equities, who has a "sell" recommendation on Bharti shares.
Bharti's shares closed down 1.6 percent at 330.50 rupees.
India's telecom sector was a market star, but bruising price wars, which have pushed call rates to among the world's lowest, have removed its shine.
Despite the fact that the number of major telecoms players has fallen from more than a dozen to just seven, due to a Supreme Court ruling that scrapped the licences of a number of smaller firms, rivalry remains intense.
Weighing on earnings were interest costs, which rocketed 69 percent from a year earlier due to Bharti's debt of almost $12 billion, incurred from the purchase of a faster 3G spectrum and the African mobile operations of Kuwait's Zain in 2010.
Bharti's Africa operations, which it bought for $10.6 billion to extend its global footprint, are still losing money.
To help trouble-shoot in India's uncertain regulatory climate, Bharti in a management overhaul named company veteran Manoj Kohli as its managing director in addition to his role as international head.
The group must pay nearly $1 billion to cover government demands for operators to pay surcharges on their airwaves and has to buy additional broadband in a March auction to meet growing demand.
Bharti and other operators also face government calls to pay larger fees to renew licences in years ahead. Foreign exchange losses on the back of a weaker rupee ballooned to 2.48 billion rupees, swinging from a 132-million rupee gain a year earlier.
The earnings were "much below expectations", said Angel Broking telecoms analyst Ankita Somani.
Bharti, one-third held by Singapore's SingTel, withdrew free talk time discounts last month to boost performance.
India's boom in phone connections has been overwhelmingly driven by cellular services and the country, with 900 million subscribers, is second only to China in terms of customer numbers.