New Delhi: Reliance Communications, India’s No. 2 mobile phone operator, reported a 16% fall in quarterly profit, as a call price war in the world’s fastest-growing mobile market took its toll, but the profit fall was smaller than expected.
India is signing up new mobile subscribers at a monthly average of 16 million, but call prices have fallen as low as 0.4 US cents a minute amid stiff competition among firms in the crowded 15-operator market to add users faster than rivals.
Reliance Communications, controlled by billionaire Anil Ambani, has been more aggressive in cutting call charges than larger rival Bharti Airtel, and earlier this month said it would offer unlimited call time to its CDMA users at a monthly price of just $13.
Chairman Anil Ambani said in a statement the financial year to March 2010 was the “most challenging year” for the Indian telecom sector, but was confident that his company would be able to sustain profit growth in coming quarters despite high competition.
The Mumbai-based firm reported a net profit of Rs1,220 crore ($270 million) for its fiscal fourth quarter ended March, compared with Rs1,454 crore reported in the year-ago quarter.
A Reuters poll of analysts had on average expected March quarter net profit of Rs852 crore.
The company did not immediately release details of its March quarter financials.
Ahead of the results, shares in Reliance Communications closed 1.4% lower on Friday. The shares have fallen more than 16%, underperforming the broader market but less than Bharti Airtel’s about 20% fall.
Reliance Communications was the worst performing stock among the BSE benchmark index components in 2009.
Bharti Airtel last month reported its first profit fall in three years.