Anil Dhirubhai Ambani-promoted Reliance Communications (RCom) reported a 2.73 per cent rise in its consolidated net profit at Rs 1,410.31 crore for the quarter ended December 31, 2008, as compared with Rs 1,372.83 crore in the corresponding period a year ago.
The growth came in mainly from new launches (DTH and GSM services), wireless subscribers and international businesses.
In comparison, Bharti Airtel, the country’s leading telecom operator, posted a 38.8 per cent rise consolidated net profit of Rs 1,976.41 crore and Aditya Birla Group company Idea Cellular recorded a 7.32 per cent fall in consolidated net profit of Rs 219.45 crore.
The company's total income rose to Rs 5,850.24 crore during the quarter under review, as against Rs 4,874.20 crore recorded in third quarter of previous financial year.
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On a standalone basis, the company’s net profit fell to Rs 397.04 crore, as against Rs 436.48 crore recorded during the same period a year ago. Total income decreased to Rs 3,398.73 crore from Rs 3,410.82 crore registered during the quarter ended December 31, 2007.
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RCom also said that it had bought back 250 foreign-currency convertible bonds (FCCBs), each with a face value of $100,000, during the quarter. The FCCBs were redeemed at a discount, translating into a saving of Rs 63.75 crore, which has been reflected in the other income of the firm.
Speaking at an analysts’ call, RCom Chairman and Managing Director Anil Ambani said that the company would have a reduced capex of Rs 15,000 crore for the next financial year. This includes a capex planned for its tower subsidiary, Reliance Infratel.
RCom had earmarked a capex of Rs 25,000 crore for the current financial year, of which Rs 16,000 crore had already been spent, he added.
The company had launched GSM services during the quarter, which helped in increasing the subscriber base to around 60 million. The GSM services had garnered 10 million users, since its launch in December 2008. The service, which is present across 14,000 towns, will expand it to around 24,000 towns soon.
The company also launched DTH services, BIG TV and acquired over 1 million subscribers during the quarter. RCom is also planning a new data centre in Delhi, apart from expanding its existing data centres in Hyderabad and Mumbai.
According to Manesh Patel, Partner (Risk Advisory Services) with Ernst & Young: “RCom is the phase of expanding its network and services. These will definitely impact the company’s revenues in the short-term, however, the company will emerge stronger in the long run.”
Minutes of Usage (MoUs) and Average Revenues Per Users (ARPU) were also declining, but these were due to addition of customers mainly at the low end, he added.
However, another analyst said that RCom’s results were not up to the expectations. For instance, the company’s ARPUs fell 7 per cent to Rs 251 per month and this cannot be attributed to the current slowdown. In comparison, Airtel’s ARPU’s fell only by 2 per cent (Rs 324) and that of Idea Cellular rose 2 per cent to Rs 266.