Telecom major Reliance Communications today beat market forecasts to report a 17.3 per cent rise in consolidated net profit for the second quarter ended September 30, 2008. Buoyed by a record number of subscriber additions, the company’s net profit rose to Rs 1,531 crore as against Rs 1,305 crore in the year-ago period.
With the addition of 5.3 million mobile users, RCom garnered revenues of Rs 5,645 crore — up 23.3 per cent compared with Rs 4,579 crore in the same quarter last year. The total subscriber base for RCom now stands at 56 million (as against Bharti’s almost 80 million subscribers), of which 47 million are CDMA subscribers and the rest GSM. Reacting to the company’s result, the scrip today rose 13.76 per cent to close at Rs 220.70 on the Bombay Stock Exchange.
However, the company’s wireless average revenue per user (ARPU) fell from Rs 282 to Rs 270 this quarter. This drop in blended ARPU led to an increase in the minutes of usage (MOU) per user per month for the company to stand at 423 (Bharti’s MOU, on the other hand, fell in the quarter under review), while the average revenue per minute during the quarter was 64 paise.
Meanwhile, its EBITDA grew by more than 17 per cent to Rs 2,302 crore. The EBITDA margin was lower at 40.8 per cent (42.9 per cent in the trailing quarter) with strong contributions across all businesses — wireless, global and enterprise.
Reliance Communications Chairman Anil Ambani said, “We have seen significant coverage expansion especially in rural areas, which required significant capex. However going forward we see an extensive decline in capex.”
The company said it has maintained a healthy balancesheet with net debt-to-equity ratio at a conservative level of 0.54:1 despite a capex spend of Rs 4,773 crore. The company is also looking at earning the 2 per cent benefit that it will earn from the universal service obligation (USO) fund as it plans to launch its GSM services by the year-end. “The 2-per-cent discount that we get for expanding in areas beyond the metros are bound to help our margins,” said S P Shukla, president, wireless business, Reliance Communications.
“We plan to launch our GSM services in some major cities by the year-end, while the pan-India rollout will take place by the middle of next year,” added Ambani. “We will maintain our margins at the current levels and maintain our growth,” he said.