Reliance Communications profit up as user base grows

Higher rates for voice calls helped the better performance

Reliance Communications (RCom), on Thursday, reported a 21.4 per cent increase in net profit during the quarter ended June at Rs 132 crore, backed by higher voice call rates. The Anil Ambani-controlled company had reported Rs 108 crore profit in the corresponding quarter the previous year.

Revenue for the quarter grew only 2.1 per cent, to Rs 5,523 crore. It had reported revenue at Rs 5,412 crore during the same period of 2013-14. Earnings before interest, taxes, depreciation and amortisation (Ebitda) rose 9.5 per cent to Rs 1,863 crore, from Rs 1,701 crore in last year's quarter. The Ebitda margin was 33.7 per cent, highest in the sector.

India operations contributed Rs 4,718 crore revenue, up 1.3 per cent year-on-year from Rs 4,659 crore the previous year but revenue from global operations dropped 5.1 per cent to Rs 1,073 crore, the company said.

It continues to underperform, compared with rivals. Bharti Airtel, the country's largest cellular telephone operator, had reported a 61 per cent jump in net profit during the quarter, at Rs 1,108 crore. Idea Cellular,  third largest operator, reported a 57 per cent rise in profit after tax at Rs 728 crore.

RCom said it generated an operational cash flow of Rs 1,863 crore in April-June. Of this, Rs 767 crore was used for repaying finance charges and Rs 415 crore on capital expenditure.

Net realisation per minute (RPM), a key metric that reflects profitability of a telecom company, increased by four per cent to 43.8 paise; realisation from voice services was 33.3p. “During the quarter, we significantly improved RPM with tariff (rate) hikes and strong focus on paid and profitable minutes,” RCom said. Average revenue per user (Arpu) increased 14.3 per cent to Rs 136.

Rivals Bharti Airtel and Idea Cellular reported much better Arpu at Rs 202 (up three per cent) and Rs 181 (up 4.6 per cent), respectively.

RCom said data traffic rose 78 per cent year-on-year, as the data customer base grew 51.3 per cent. Its total 3G (third-generation services) subscriber base was 13 million at the end of June.

The company raised Rs 4,808 crore through qualified institutional placements during the quarter, and its promoters also pumped in Rs 1,300 crore by subscribing for preferential shares. The proceeds are being utilised primarily for repayment of debt and de-leveraging the balance sheet, it said.

Global Cloud Exchange, subsidiary of RCom, has raised Rs 2,100 crore ($350 mn), of which $250 would be used to refinance the existing bank loans and the remaining money would be spent as capital expenditure, it added.