Mumbai: Reliance Communications Ltd (R-Com), India’s fourth largest mobile carrier by subscribers, posted a modest 2.7% gain in quarterly net profit to 108 crore, mainly as its overseas business diluted domestic gains and user minutes declined.

Revenue inched up 1.9% from a year ago to 5,301 crore in the December quarter.

Earnings for the Reliance Group company improved primarily on the back of higher average revenue per user (Arpu), higher revenue per minute (RPM) and higher data traffic on its network.

Data traffic on R-Com’s network grew 85% year-on-year to 41.7 billion megabytes (MB), and data usage per subscriber improved 41.4% to 396 MB.

Average revenue per user grew 11.6% to 125 and revenue per minute increased 5.1% to 43.5 paise.

But, crucially, minutes of usage (MoU) declined 1.8% year-on-year to 101.9 billion.

A Bloomberg poll of analysts had pegged R-Com’s revenue at 5,582.20 crore and profit at 248 crore.

On a sequential basis, R-Com’s revenue was down 3.8% and net profit was down 84%.

To be sure, in the July-September quarter, R-Com’s net profit had received a significant boost in the form of a three-fold rise in other income, which included 441 crore in the form of a one-off provisional write-back.

Nonetheless, other income of 246 crore in the December quarter, a 49% increase over a year ago, was significant as far as R-Com’s overall profitability is concerned. While R-Com’s India business did relatively better, its global operations were a drag on the company’s overall numbers. Revenue from R-Com’s India business rose 3.2% year-on-year to 4,637 crore and earnings before interest, taxes, depreciation and amortisation (Ebitda) was up 15% over the year earlier at 1,606 crore. Global operations’ revenue, however, declined 8.3% year-on-year to 1,090 crore and operating profit fell 6.6% to 239 crore.

R-Com, which declared its results after the stock markets closed on Friday, did not offer any reasons for the decline in turnover and profit at its global operations.

Ankita Somani, telecom sector analyst at Angel Broking Ltd, said R-Com disappointed on minutes of usage.

Bharti Airtel and Idea (Cellular) also saw MoUs go down, but R-Com’s performance has been very poor," Somani said. “This implies that there is a slowdown due to the reduction in free minutes, and that the industry dynamics are changing." Somani also said it would be a while before data can contribute substantially to overall profitability, as most of the telcos offer fast third-generation or 3G spectrum services primarily only in large cities and metros. “They have to still reach the B and C circles and that will take time," she said.

R-Com’s earnings performance in the October-December period compared unfavourably with that of its peer Idea Cellular Ltd, a part of the Aditya Birla Group, which saw its revenues increase 18% year-on-year to 6,613.06 crore and net profit double to 467.73 crore. Its MoU, Arpu and RPM were all ahead of R-Com’s numbers.

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