RCom posts marginal growth in turnover

RCom posts marginal growth in turnover

Mumbai: Signaling a bottoming out of the impact on revenue due to a tariff war between telecom operators over the last 12 months, Reliance Communications Ltd (RCom), India’s second largest mobile telephony company, posted a marginal growth in turnover and operating profit for the quarter ended 30 September, on a sequential basis.

RCom, the telecom services arm of the Reliance Anil Dhirubhai Ambani Group, saw a 0.2% quarter-on-quarter growth in its revenue to Rs5,118 crore, while its operating profit was up 1.7% to Rs1,660 crore in the same period.

Owing to a 36.4% lower outgo on account of finance charges, however, the company’s net profit was around 78% higher at Rs446 crore.

During the second quarter of the current fiscal, RCom also reported a mark-to-market foreign exchange gain of Rs735 crore from forex earnings and servicing of forex denominated debt, due to the dolalr weakening against rupee. RCom offset this gain against an earlier notional forex loss.

RCom’s shares traded at Rs169.96 apiece on the Bombay Stock Exchange (BSE) on Friday, a 3.52% drop from its previous close. The bourse’s benchmark equity index, Sensex, dropped 2.10% to close at 20156.89 points.

“The industry has witnessed a radical transformation in tariffs over the last 12-month. But the big moves are now over and we don’t expect tariffs to come down irrationally," said Syed Safawi, president of RCom’s wireless business.

Safawi attributed the marginal improvement in performance to discipline in usage and quality of customers that RCom has induced in its network. In line with a decision to reduce free minutes on its network, RCom has brought them down by a further 20% in the last quarter, after eliminating 50% of such minutes in the first quarter of the current fiscal.

RCom witnessed an average revenue per user (Arpu) of 44 paise for the quarter under review and according to Safawi, RCom has managed to maintain Arpu at the same level for the last three quarters.

However, on a year-on-year basis, RCom witnessed a decline in revenue and profitability. On a consolidated basis, while income from operations at Rs5,023 crore was 8.6% lower than the year-ago period, net profit in the same period slipped by 40%.

After a deal to hive off RCom’s telecom tower business to GTL Infrastructure Ltd fell through in the last quarter, the company, saddled with a Rs33,000 crore debt on its books, is still looking at strategies to reduce some of this burden.

Though reducing the existing debt is a lingering concern with the company, Safawi expects the company’s cash flow to take care of the capital expenditure required going forward, without resorting to any more borrowing.

With most of the investment required to roll out 3G services – which R-Com expects to roll out in the current quarter - in place, Safawi said that the company’s capex would come down to a fifth of the Rs35 crore per day being incurred earlier.