The horrible run continues for Reliance Communications (RCom), India’s second-biggest mobile phone operator.
On Friday, the Anil Ambani firm said net profit plunged 61% — the 10th straight quarter of decline in the bottomline - to Rs186 crore in October-December as debt turned heavy even as average revenues per user or Arpu stayed flat at 0.45 paise.
Operating profit or Ebitda, fell to Rs1,610 crore from Rs1,670 crore a year earlier, while the Ebitda margin declined to 31.9% from 33.3%.
RCom follows bigger rival Bharti Airtel in reporting earnings that fell short of expectations after phone usage slowed and costs increased.
“Net profit is down year-on-year because of costs related to 3G spectrum and the rollout of services,” Unmesh Sharma, an analyst at Macquarie Capital Securities in Mumbai, said before the results announcement. “In the near term, this is going to continue to be a pressure across the sector.”
Net sales fell to Rs4,824 crore from Rs4,865 crore a year earlier.
That’s lower than the Rs5,210 crore median of 21 analysts’ estimates.
Financial charges almost tripled to Rs378 crore in the third quarter.
The silver lining is the company added 30 lakh new subscribers of which 28 lakh were 3G subscribers. RCom said it now has 15 crore subscribers.
Reliance, which spent Rs8,590 crore in 2010 at auctions to buy spectrum for third-generation services, is refinancing foreign-currency loans through deals with Chinese banks.
The quarter also saw RCom become free-cash-flow positive for the first time with all projects completed.
RCom now aims to repay its Rs33,000 crore of debt by March 2013. Crucial to that will be the sale of its telecom tower arm for an estimated Rs15,000 crore and the Singapore listing of its undersea cable business, which could generate another Rs7,500 crore.
If that happens, the worst would be over for the beleaguered firm.
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