Competitive pressures hurting India telecoms companies

Bharti Airtel and its smaller Indian telecoms rivals are set to report that quarterly earnings were hit by a vicious price war that has sent call tariffs tumbling in the world's fastest-growing mobile services market.

The outlook remains bleak with more competition expected to keep pressure on wafer-thin call charges, while heavy bidding for 3G radio waves are set to balloon their costs in the near term.

Analysts expect each winner to spend up to USD 3 billion for acquiring the 3G and wireless broadband spectrum, and building next-generation networks would cost billions of dollars more.

"The entire sector is under pressure after the price war and things will remain so for the rest of 2010," said R.K. Gupta, managing director at Taurus Mutual Fund, which manages about USD 520 million in assets.

For Bharti, which dominates India's mobile market with about 128 million subscribers, the integration of its USD 9 billion acquisition of Kuwaiti Zain's African assets will be crucial for its earnings in the coming quarters.

Bharti sees itself becoming the world's No. 5 wireless firm after closing the deal, which comes after two failed attempts to finalise tie-ups with South Africa's MTN.