(Adds CEO's comment, details)
By Sankalp Phartiyal
MUMBAI, Jan 24 (Reuters) - Bharti Airtel, India'slargest telecoms network operator, reported its lowest profit infour years as competition from a new rival hit revenues thatwere also affected by a cash crunch, after the federalgovernment scrapped high-value banknotes.
A brutal price war has ensued in India's mobile phone marketsince the entry late last year of Reliance Jio Infocomm, ownedby the billionaire Mukesh Ambani, which has offered hugediscounts to win customers.
Rivals such as Bharti have been forced to respond with pricecuts of their own, though at a steep cost. In November rivalVodafone booked in a $5 billion charge on the value ofits Indian business due to the price war.
Bharti's consolidated net profit fell to 5.04 billion Indianrupees ($73.99 million) in its third quarter ended Dec. 31, downfrom 11.08 billion rupees in the same period of 2015.
This was the company's lowest profit since the Decemberquarter of 2012.
The result was 50 percent below analysts' profit forecasts,which averaged 10.87 billion rupees, according to ThomsonReuters data.
"The quarter has seen turbulence due to the continuedpredatory pricing by a new operator," Gopal Vittal, Bharti'smanaging director and chief executive for India and South Asia,said in a statement on Tuesday.
"This has led to an unprecedented year-on-year revenuedecline for the industry, pressure on margins and a seriousimpact on the financial health of the sector."
Bharti's revenue fell 3 percent to 233.64 billion rupeesover the past three months, due to cheaper voice and datatariffs. This was the company's first ever year-on-year fall inrevenue.
Average revenue per user for Bharti's voice services inIndia fell nearly 7 percent from the July-September period to123 rupees, Bharti said.
Bharti also reported losses from its Africa operations of6.2 billion rupees, up from 4.87 billion rupees in the sameperiod last year, and hit by the devaluation of Nigeriancurrency, the company said.
Prime Minister Narendra Modi's move to ban 500 and1000-rupee notes also eroded consumer spending power as mostIndians still use cash at local touchpoints to rechargeso-called pre-paid mobile phone connections.
Bharti Airtel shares closed 0.99 percent lower ahead ofresults in a broader Mumbai market that ended 1 percent higher. ($1 = 68.1200 Indian rupees) (Reporting by Sankalp Phartiyal; Editing by David Goodman, GregMahlich)
Vodafone (VOD)
