Reliance Communications to pull more discounts as Q4 profit tumbles

Written by Reuters | Mumbai | Updated: May 3 2014, 14:04pm hrs
Reliance CommunicationsReliance Communications, controlled by billionaire Anil Ambani. (Reuters)
Reliance Communications Ltd , India's fourth-biggest mobile carrier, said it would focus on further withdrawing customer discounts and improving its profitability as its quarterly profit fell by almost half.

Carriers in the highly-competitive Indian market have seen some pricing power return in the past year after a court order forced some of their smaller rivals out of the market. They have withdrawn promotional offers, effectively raising prices of voice calls, which account for about 85 percent of revenue.

Mumbai-based Reliance Communications increased voice call prices by about a fifth late last month and also increased the base tariff for voice calls.

"We'll continue our thrust to focus on paid and profitable minutes, continue to reduce promotional and free minutes," Gurdeep Singh, chief executive of the company's consumer business, said in a phone interview on Friday.

Reliance Communications, controlled by billionaire Anil Ambani, said consolidated net profit fell 48.5 percent to 1.56 billion rupees ($26 million) for its fourth quarter ended March 31, from 3.03 billion rupees reported a year earlier.

Analysts on average had expected a net profit of 2.15 billion rupees, according to Thomson Reuters data. The results of the latest and the year-ago quarters included one-off items.

With net debt of $6.7 billion, or more than five times its operating profit, Reliance Communications is the most leveraged among publicly traded Indian telecom carriers. The debt load has hurt its profit in recent years.

Planned sales of assets, including stakes in its tower and submarine cable units, to cut its debt have not materialised.

Singh said the company was "extremely focused" on reducing its debt, without saying if it was involved in any talks to sell assets.

Consolidated net profit for the latest quarter was helped by a tax reversal of 10.26 billion rupees. But finance costs jumped more than a fifth from a year earlier to 9.07 billion rupees and depreciation and amortisation costs rose 62 percent to 17.67 billion rupees.

Net income from operations rose 5.3 percent from a year earlier to 54.05 billion rupees. Monthly average revenue per user, a key metric for telecoms carriers, rose 2.4 percent from the previous quarter to 128 rupees, while realisation per minute was little changed at 0.432 rupees.

Reliance Communications had 12.9 million 3G customers at the end of fourth quarter, it said.

Shares in the firm, valued at more than $4 billion, closed 0.3 percent lower ahead of the results in a Mumbai market that edged down about 0.1 percent.

The stock is down 6 percent this year, after surging more than 75 percent last year on its network-sharing pact with the 4G telecoms unit of Reliance Industries. ($1 = 60.3150 Indian rupees)

RCom Q4 net profit drops 48.5% to Rs 156 crore

(PTI) Telecom operator Reliance Communications today reported a 48.5 per cent dip in consolidated net profit to Rs 156 crore in the quarter ended March 31.

The company controlled by Anil Ambani had posted a profit of Rs 303 crore a year earlier.

"In the same period last year, there was a one-time income of about Rs 550 crore due to some provision in business restructuring, which had impact on performance in that period. Otherwise, business is as usual," RCom Chief Executive Officer for Consumer Business Gurdeep Singh told PTI.

On a quarterly basis, profit increased 44 per cent from Rs 108 crore in the third quarter.

"This was overall a satisfactory quarter," Singh said.

Revenue increased 5.36 per cent to Rs 5,405 crore in the quarter from Rs 5,130 crore in the same period a year ago.

The company's net debt increased 3.3 per cent to Rs 40,178 from Rs 38,864 crore a year ago. Net debt was down marginally from Rs 40,761 crore in the preceding quarter.

Finance costs increased 21 per cent to Rs 907 crore.

For the full year ended March, net profit increased 55.8 per cent to Rs 1,047 crore from Rs 672 crore in FY13.

"We continue to focus on growing profitable and paid minutes on our network and the current tariff hikes are part of our continued efforts to reduce free and discounted minutes and offset the ever-rising costs of input materials," Singh said.

He added that the company expects to improve performance over the next few quarters with increase in revenue from its telecom network usage on a per-minute basis.

Revenue in FY14 rose 3.29 per cent to Rs 21,238 crore.

"Our growth engine, which is GSM wireless with data, now contributes 72 per cent of total revenue," Singh said.

The total data (Internet) traffic on the RCom network increased 20.5 per cent on a quarterly basis to 50,251 million megabytes.

"Traffic has increased due to increase in data subscribers and higher data usage per customer. Now we have 37.4 million data customers, out of which 12.9 million are 3G customers. Now more than one-third of the data users on our network are 3G subscribers," Singh said.

RCom shares fell 0.41 per cent to Rs 122 at the close on the BSE, before the results were announced.