The country?s second largest telecom operator, Reliance Communications (RComm), on Friday reported a 85% decline in consolidated net profit at Rs 250.89 crore for the April-June quarter this year due to high foreign exchange losses and low tariffs. The company logged a net profit of Rs 1,636.61 crore in the same quarter of the previous year.
Profit in the previous quarter stood at Rs 1,220 crore. Revenues were stagnant at Rs 5,109 crore, up 0.3% from Rs 5,093 crore in the last quarter. However, the teleco managed to grow its earnings before interest, tax, depreciation and amortization or EBITDA that rose 1.9% sequentially to Rs 1,632 crore from Rs 1,602 crore.
RComm results came after the market hours. The stock fell 5% to close at Rs 168 on the Bombay Stock Exchange. On Wednesday, the country?s largest telecom operator, Bharti Airtel, reported a net profit for the first quarter at Rs 1,681 crore.
In a conference call, Satish Seth, group managing director, RComm, said, ?We will continue to focus on quality subscribers and increase our paid minutes of usage in a bid to improve our rate per minute (RPM).? During the quarter, the firm maintained its wireless RPM at Rs 0.44, while minutes of usage per user declined from 318 minutes in the last quarter to 295 minutes in this quarter. ?During the quarter, about 50% of the free minutes of usage were removed and our RPM are now in line with the industry. Going ahead, wireless revenues would be driven by data usage which would be post the launch of 3G services, especially in the three metros Mumbai, Delhi and Kolkata,? he said.
The firm intends to spend about Rs 3,000 crore as capex on its GSM network. Mahesh Prasad, president wireless business, RComm, said, ?Our capex plans for the year on the GSM network would be at Rs 3,000 crore, as the spend now would be directly for 3G network instead of 2G. However, for any modification in our 3G network roll-out plans, we would be spending additionally.?
However, the average revenue per user (arpu) from its 111 million subscribers dipped to Rs 130 down 6.5% from Rs 139. Japan?s NTT DoCoMo and Norway?s Telenor ASA set off a tariff war last year when they entered the Indian market by impacting the arpu?s of the major telecom operators.
According to Seth, the current level of rates are the lowest and these might not be sustainable for the new players. ?Only the incumbent players have been able to survive the impact of the intense competition. Though at national levels, the rates have stabilised. We do see price movements at circle levels,? he added. RComm saw an increase in its debt to Rs 28,481 crore by the end of first quarter from Rs 19,888 crore in the last quarter and has been trying to raise funds in bid to do away with its debt. During the quarter, the firm said its board had approved divestment of about 26% of the firm?s stake to a strategic or private equity investor.
The teleco also entered into a deal worth Rs 50,000 crore with GTL Infrastructure and said it would form a separate entity by demerging its tower arm Reliance Infratel.