Reliance Comm Q4 net profit surges 47%

Written by Reuters | Mumbai, April 30: | Updated: Apr 30 2008, 22:25pm hrs
Reliance Communications, India's No. 2 mobile operator, beat forecasts with a 47 percent profit jump and said it was confident of an improving performance in the world's fastest-growing wireless market.

India overtook the United States in March as the biggest market for wireless services after China, when 10.2 million people signed up for mobile phone services that month to take the country's user base past 261 million.

Reliance, part of the Anil Dhirubhai Ambani Group, added 4.8 million mobile users between January and March, taking its total to 45.8 million. Most of its customers are on the CDMA platform.

Chairman Anil Ambani told reporters its expansion of the popular GSM platform to all of India's 23 telecom circles from the eight it services would start towards the end of the year and would be completed over the next 12-18 months.

"We have committed more than $1 billion to the GSM roll-out and we are very confident of the business prospects," he said.

Local call rates of as low as 1 U.S. cent a minute and availability of cheaper handsets prompted a 25-fold increase in the number of India's mobile phone users between 2002 and 2007.

Yet only 22 percent of India's billion-plus population own mobile phones, and operators have started expanding to smaller towns and rural areas where 70 percent of the people live.

"Prospects are definitely strong. Now with the GSM launch scheduled in a year or so, (earnings) visibility is good," said Harit Shah, an analyst at Angel Broking, who has a buy on the stock, along with sector leader Bharti Airtel and smaller rival Idea Cellular.

Ambani said the company was looking for market conditions to improve before launching an initial public offering of its telecom tower unit, Reliance Infratel, and an overseas listing of its Reliance Globalcom unit.

Reliance Communications would also start its direct-to-home satellite television services shortly, he said.

Forecast-beating results

Reliance Communications said net profit rose to 15.03 billion rupees ($372 million) in the fourth quarter to March, from 10.24 billion reported a year earlier. Revenue rose to 53.1 billion rupees from 39.4 billion.

A Reuters poll of 10 analysts had forecast net profit of 13.3 billion rupees on sales of 52.6 billion.

Bharti Airtel last week reported a 37 percent rise in quarterly net profit to 18.5 billion rupees. It had almost 62 million mobile users at end-March, a third more than Reliance.

Ambani said in January the company would spend about $6 billion in the year to March 2009 for GSM expansion and towers, on top of a $5.3 billion investment in the year just ended.

Shares in Reliance Communications closed 0.9 percent higher at 579.75 rupees, having risen as much as 3.5 percent in a Mumbai market that slipped 0.5 percent.

Reliance shares fell 32 percent in the March quarter, against a 23 percent drop in the main index. ($1=40.4 rupees)