Infocomm sees Rs 233 cr net loss

Low ARPU, subscriber base lead to change in calculations.

Reliance Infocomm has projected that it will close 2004-05 with a net loss of Rs 223 crore against the Rs 2,331 crore net profit estimated earlier.

Lower than expected average revenue per user (ARPU) and a subscriber base falling short of projections resulted in the change in the company's calculations.

The company's net loss is estimated at Rs 164 crore during April-December 2004, while the net loss at the end of 2003-04 was Rs 390 crore. The company did not respond to a questionnaire e-mailed on Saturday.

A company spokesperson today said the Reliance Infocomm would give a detailed response today.

In a presentation after its third-quarter results, the Reliance group had said Reliance Infocomm's operations were "expected to be profitable in the forthcoming quarters".

According to Reliance Infocomm's projections for 2004-05 to 2007-08, which have been submitted to lenders, the wireless subscriber base is estimated to reach 13.58 million at the end of March 2005, 9.7 per cent lower than the earlier projection of 14.9 million.

The new projection of 1.1 million wireline subscribers is a third of the earlier estimate of 3.46 million.

The company had 11.25 million subscribers at the end of February 2005, of which 11.18 million were wireless subscribers. Reliance Infocomm's average revenue per user from wireless subscribers is estimated to reach Rs 331 at the end of March, two-thirds of Rs 500 anticipated earlier.

For wireline subscribers, the Rs 650 anticipated average revenue per user at the end of March 2005 is 72 per cent of the original estimate.

As a result, the company's total revenue projection of Rs 6,760 crore at the end of March 2005 is nearly 47 per cent short of its earlier estimate of Rs 12,705 crore, while gross profit of Rs 1,469 crore is nearly a third of the original forecast of Rs 4,255 crore.

Reliance Infocomm, however, hopes to turn the corner during the current financial year and is projecting a net profit of Rs 1,266 crore, while total revenue is estimated at Rs 4,221 crore.

The average revenue per user is estimated to decrease further to Rs 313 for wireless subscribers and Rs 618 for wireline users. The company has revised its project cost estimates to Rs 24,900 crore at the end of 2004-5, from its estimate of Rs 18,600 crore up to December 2004.