RCom profit slips 86% even as revenues grow

Reliance Communications' fourth quarter net profit fell 86 per cent to Rs 169 crore, compared to Rs 1,219 crore in the corresponding quarter last year due to an increase in costs and drop in margins.

"This has been the lowest net profit figure that the company has posted in the last many quarters," said a telecom analyst, requesting anonymity. The company's revenues, however, went up by 54.6 per cent to Rs 7,876 crore from Rs 5,092 crore in the same quarter last year.

Syed Safawi, the chief executive officer of the company said this has been the strongest revenue growth it has seen in the last seven quarters, sequentially. "This is a result of a re-aligned portfolio and focus on paid minutes which has started to pay off. We have also seen non-voice revenue growth driven by increase in data usage.”

The company's wireless average revenue per user fell 23 per cent on a year-on-year basis to Rs 107 from Rs 139 last year. Though the revenue per minute stood steady at 44 paise per minute, its wireless minutes of usage fell, too, by 24 per cent to Rs 241 compared to Rs 318 last year.

The company which launched 3G services in November last year, has seen 1.7 million of its subscribers taking to the service.

The operator has 135 million subscribers and 16.8 per cent share in the subscriber share. It also has 9,000 3G-enabled sites and has launched services across 330 towns in all 13 circles where it holds a licence.

RCom also earmarked a sum of Rs 1,500 crore as capital expenditure for 2011-12, which will be sourced from internal accruals. It had spent Rs 3,000 crore in the year ended March 31, excluding 3G rollout expenses. "After the investments we have made in network and 3G, peak capex is behind us now," said Safawi.

Debt, which has been a long-standing concern for investors, stood at Rs 32,048 crore. The operator's net debt is 3.5 times its Ebitda (earnings before interest, taxes, depreciation and amortization).

The company said it plans to bring it down to three times the EBIDTA in line with industry standards.

RCom’s stock went up three per cent at Monday's trade, to close at Rs 87 per share, on the Bombay Stock Exchange.