Reliance Communications reported a 60 per cent drop in consolidated net profit year-on-year to Rs 102 crore for the quarter ended September on the back of a sharp rise in interest costs. The net profit performance was below analyst estimates of Rs 160 crore as interest charges shot up 161 per cent to Rs 593 crore.
The company’s debt pile increased by about Rs 1,000 crore over the last six months and is at Rs 33,600 crore at the end of the September quarter. The net profit was boosted by other income to the tune of Rs 171 crore.
While revenues were up 3.2 per cent y-o-y to Rs 5,202 crore, earnings before interest, depreciation, taxes and amortization (Ebidta) was up 2.1 per cent. Analysts say that operating performance in a seasonally weak quarter has been good. In a quarter when traffic volumes trend down the company managed to grow its wireless revenues by 4 per cent y-o-y and wireless Ebidta by 16 per cent. “Wireless revenues fell 2.3 per cent on a sequential basis (better than expected) indicating that the company has been able to maintain market share arresting the decline witnessed in the previous quarters,” says an analyst with a foreign brokerage.
In line with other telecom operators, lower sales and marketing expenses has helped the company maintain Ebidta margins at 31.5 per cent, a fall of 30 bps as compared to the year ago quarter. However, on a sequential basis the company’s Ebidta margins improved by 50 bps as compared to the June quarter number of 31 per cent. The company has been able to hold on to revenues per minute at 43-44 paise range with the current quarter number at 43.2 paise, a slight increase over the June quarter number of 43 paise. The company says that it has achieved RPM stability for the last 10 consecutive quarters amidst increasing competition and over supply of minutes in market place.
To improve profitability, the company had raised pre-paid tariffs in the September quarter by 25 per cent across the GSM and CDMA platforms. The company expects the full impact of the revenue hike to be reflected in the next financial year.