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R-Com Q2 consolidated net falls 43.5%

R-Com Q2 consolidated net falls 43.5%
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First Published: Sat, Nov 12 2011. 07 21 PM IST

Reliance Communications chairman Anil Ambani. (File photo)
Reliance Communications chairman Anil Ambani. (File photo)
Updated: Sat, Nov 12 2011. 07 21 PM IST
Mumbai: Reliance Communications Ltd (R-Com), the mobile telephony arm of the Anil Ambani-led Reliance Group, posted a net profit of Rs252 crore for the quarter ended 30 September, 43.5% lower than in the same period a year ago.
Reliance Communications chairman Anil Ambani. (File photo)
The telecom company’s total operating revenue in the same period declined 4.6% to Rs4,792 crore.
In the past few quarters, Indian telecom companies have witnessed year-on-year dips in topline and bottomline due to a tariff war fuelled by competition from new operators.
In a signal that the impact of the tariff war may have peaked out, R-Com managed to sustain an operating profit of Rs1,605 crore for the September quarter, a marginal sequential increase.
As R-Com’s net financial charges came down 44% quarter-on-quarter to Rs227 crore, it helped the company post a 60.5% sequentially higher net profit for the September quarter.
Unlike Bharti Airtel Ltd, another telecom firm that suffered on account of foreign exchange-denominated debt becoming more expensive due to a weakening rupee, R-Com did not have to recognize any such variation due to a couple of “schemes of arrangement” sanctioned by the Mumbai high court in April and May.
The arrangements sanctioned by the court allows R-Com to set off any mark-to-market loss on loans or derivatives on account of foreign exchange fluctuations against its general reserve of Rs31,033 crore, as on 30 September. R-Com hasn’t done so yet as it is further allowed to defer the aforementioned accounting treatment till the end of the fiscal, the notes to its financial statement said.
Without the help of such a court-sanctioned scheme, R-Com would have to recognize an additional Rs2,714 crore towards finance charges, that would have seen the firm plunge into losses for the September quarter.
Turnover from R-Com’s main wireless business rose 2.1% quarter-on-quarter to Rs4,417 crore between July and September.
Syed Safawi, president -- wireless business, R-Com stated that the company’s growth in the last quarter was “consistent and consumption-led.”
The revenue per minute realized by R-Com in the September quarter rose marginally to 0.5% to 45 paise and has been stable at those levels for the last seven quarters, according to Safawi.
R-Com has been taking out free minutes of use from its network over the last three to four quarters as it focused on paid minutes. Such free minutes are almost entirely out of the system, Safawi said.
The firm’s minutes of usage also grew 1.6% sequentially, which according to a company statement was the highest in the industry.
aveek.d@livemint.com
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First Published: Sat, Nov 12 2011. 07 21 PM IST