Competitive pressures over lower tariffs have eaten into the profits of Reliance Communications’ quarterly performance. The company has posted one of its worst-ever results, with an 84 per cent drop in its consolidated net profit to Rs 251 crore, compared with Rs 1,636 crore in the corresponding quarter last year.
Reliance has also taken a hit of Rs 440 crore in terms of a notional forex loss and net interest cost, which have added to the decline in profits. The company buys equipment from Chinese vendors and has exposure to international businesses, which has resulted in the provisioning for forex loss.
“The results have been much below our estimates. There has been a swing primarily due to interest costs. Also, the tariff war has begun after the first quarter last year, as Tata Docomo launched its operations. This has also added to the company’s decline in profit,” said Bhavesh Gandhi, telecom analyst at Indiainfoline.
The revenues of the company fell by 17 per cent to Rs 5,109 crore, from Rs 6,145 crore in the same quarter last year.
The company, however, in a conference call hosted for analysts, assured that its revenue per minute has increased to 44 paise per minute, and has come on a par with other telecom players.