Bharti Airtel, controlled by billionaire Sunil Mittal, said consolidated net profit fell to Rs 284 crore in the fiscal third quarter that ended December 31, from Rs 1,011 crore a year earlier.
Revenue rose 9.5 percent to Rs 20,240 crore, but the company was hit by foreign exchange losses, higher taxes and financing costs.
Analysts had expected the company to report net profit of Rs 845 crore on revenue of Rs 20,279 crore, according to Thomson Reuters I/B/E/S.
Shares in the company, valued at $24 billion, recovered after falling as much as 3.5 per cent post earnings announcement.
"Market conditions have been challenging in recent quarters due to pricing pressures and rising input costs, which have put enormous pressure on the sector and consequently the margins," Chairman Sunil Mittal said in a statement.
"However, the worst seems to be getting over, with corrections taking place in customer acquisition practices and the tariffs", he said.
For years, stiff competition in a crowded market has limited Indian telecoms companies' ability to raise prices. The outlook for bigger firms including Bharti Airtel has improved since an early 2012 court order to revoke permits of several operators, signalling the exit of some smaller companies from the market.
Bharti Airtel and Idea Cellular, India's No. 3 mobile carrier by revenue, recently raised call prices by withdrawing discounts. This week Idea reported a smaller-than-expected increase in quarterly profit as higher network operating costs ate into margins.
NEW SPECTRUM NEEDED
The government wants established operators to pay surcharges on their airwaves, which will mean a bill of almost $1 billion for Bharti, the country's No.1 operator by both revenue and number of subscribers, which also needs to buy new spectrum in an auction due in March.
In 2010, it ventured into 15 African countries, buying mobile assets there for $9 billion. It has yet to turn around the money-losing African businesses.
Finance costs for Bharti Airtel rose 69 percent during the December quarter to Rs 1,332 crore from a year earlier, and income tax expense rose 20 percent.
The company also recorded a forex loss of Rs 248 crore compared with a gain of Rs 13.2 crore a year earlier
Monthly average revenue per user, a key metric for telecoms carriers, rose 4 percent from the previous quarter to Rs 185 for its Indian operations.
Singapore's SingTel owns almost a third of the firm.
Copyright Thomson Reuters 2013