RComm third quarter net profit up marginally, misses estimates

By Devidutta Tripathy

NEW DELHI (Reuters) - Reliance Communications Ltd , India's fourth-biggest mobile phone carrier, missed estimates posting a small rise in quarterly profit on lower than expected revenue and higher finance costs.

Consolidated net profit rose about 3 percent to 1.08 billion rupees for its fiscal third quarter to end-December, from 1.05 billion rupees a year earlier, the company controlled by billionaire Anil Ambani, said on Friday.

Bigger Indian carriers, including Reliance Communications have benefited from lower competition and were able to raise call prices last year after a court order on a widespread licensing scandal forced some smaller carriers either scale back or shut down operations.

But a heavy debt load has weighed on Reliance Communications' profitability, and the company has seen little success in its efforts to cut debt by selling assets.

Reliance Communications, which plans to sell a stake in its international business unit, continues talks with potential buyers, Gurdeep Singh, chief executive of Reliance Communications' wireless business said, adding the focus was more on improving operating margin, than growing revenue.

"We are very conscious and clear that we are looking at improving EBITDA margin and EBITDA delivery, and clearly chasing profitable minutes growth," Singh told Reuters in a phone interview after results were published.

Singh said a cut back on discounted, unprofitable voice minutes led to a fall in call minutes used by customers and checked revenue growth in the quarter. Indian carriers receive more than 80 percent of revenue from voice call services, but contribution from data services is growing much faster.

Revenue in the third quarter rose 1.9 percent from a year earlier to 54.03 billion rupees, lagging estimates. Nine analysts on average had expected a net profit of 2.58 billion rupees on revenue of 55.52 billion rupees, according to Thomson Reuters StarMine.

Monthly average revenue per user, a key metric for telecommunication carriers, rose nearly 12 percent on year to 125 rupees in the third quarter, while realisation per minute rose 5 percent to 0.435 rupees.

Net finance costs in the quarter were 24 percent higher from a year earlier at 7.49 billion rupees. Reliance Communications is the most leveraged among listed Indian mobile carriers with its net debt of $6.5 billion being more than five times its annualised operating profit.

Shares in Reliance Communications, valued at more than $4 billion, closed 1.1 percent lower ahead of the results in a Mumbai market that gained 0.5 percent.

(Reporting by Devidutta Tripathy; Editing by Subhranshu Sahu and Sofina Mirza-Reid)