RCL profit jumps 198%

BS 200 SCORECARD

Reliance Communications has posted 198 per cent increase in net profit at Rs 924 crore on a consolidated basis for the third quarter ended December 2006, compared with Rs 310 crore posted in the corresponding quarter a year ago.

The company has posted revenues of Rs 3,755 crore, up by 26 per cent, from Rs 2,991 crore recorded during the same period of previous year.

The company's earnings before interest, tax, depreciation and amortisation (EBITDA) margins grew 41 per cent during the quarter under review from the 29 per cent recorded during the comparable quarter. EBITDA margins recorded "strong contributions" from all business segments, including personal, global and enterprise, Reliance Communications said in a release today.

The company's shareholders' equity crossed Rs 20,000 crore (over $4.5 billion), while net debt to equity ratio further reduced to 0.07:1.

The company has proposed a capex of Rs 7,700 crore for the financial year 2007. Commenting on the results Reliance Communications Chairman Anil Dhirubhai Ambani said, "We have delivered another quarter of strong revenue and EBITDA growth across all our business segments. Net profits have increased by three times in the past year."

The performance has lifted Reliance Communications into the select group of companies with annualised EBITDA of over Rs 5,000 crore, EBITDA margins above 40 per cent, shareholders equity of over Rs 20,000 crore, and a stock market value of nearly Rs 94,000 crore.

Reliance Communications' EBITDA margins of 41 per cent were much in line with that of Bharti Airtel (40.8 per cent), while both the companies posted a substantial increase in net profit. While Reliance has posted 198 per cent increase in net profit that of Bharti Airtel stood at 123 per cent.

According to Sumit Modi, research analyst - telecom of Emkay Shares, the high performance of the telecom companies was due to the fact that there is a reduction in license fees.

The ARPUs were also looking good, while the expectations from the industry was also good, while the overall wireless business in the country was also looking good.

Another analyst said the reduction in net debt to equity ratio means that the company's borrowing capacity to raise funds for future growth has increased substantially.