Reliance Comm profit falls for 10th straight quarter

A man walks past a logo of Reliance Communication before the Annual General Meeting in Mumbai September 22, 2009.

NEW DELHI (Reuters) - Reliance Communications (RLCM.NS) reported its 10th straight quarter of declining profit as interest costs soared, with investors betting on a sale of the No. 2 mobile operator's tower business to pare its heavy debt load.

Reliance Communications, which last month secured $1.18 billion loans from Chinese banks to redeem dollar bonds, has long been trying to sell assets to cut its debt -- $6.9 billion as of December -- but has so far had little success.

Sources have said Reliance Communications is in talks with U.S. buyout giants Blackstone (BX.N) and Carlyle CYL.UL on selling its telecoms tower arm in a deal that could be worth more than $3 billion, but a deal is not yet close to competion.

"Tower sale (talk) is progressing well, but we won't be able to share any specific ... at this stage obviously," Arvind Narang, Reliance Communications' head of investor relations, told analysts on a conference call, adding details would be shared at an "appropriate time".

Reliance Communications, controlled by billionaire Anil Ambani, said on Friday consolidated net profit fell 61 percent year-on-year for its fiscal third quarter ended December to 1.86 billion rupees. It competes with 14 other carriers in the ferociously-competitive Indian market.

The company is also looking to raise up to $1.5 billion in a Singapore listing of its undersea cable business, sources said last month.

"The telecoms sector itself is facing so many headwinds and on top of that Reliance Communications has many company specific issues to deal with, mainly the high debt pile," said K.K. Mital, a fund manager at Globe Capital Market in New Delhi.

"There is still no clarity on how they plan to pare debt, and you can expect some revival in its performance only after they address that," he said.

In a verdict that is likely to shake up India's telecoms industry, the country's Supreme Court last week ordered revoking 122 zonal licences issued to companies in a scandal-tainted 2008 sale.

Reliance Communications is not affected by the court ruling for revoking licences, but one of its units and three group executives are among 19 people and six companies charged so far by police in the telecoms probe as a trial continues.

REVENUE LAGS ESTIMATES

Revenue for the three months to December rose slightly to 50.52 billion rupees, from 50.04 billion rupees a year earlier.

Analysts in a Reuters poll of brokerages had on average expected net profit of 1.95 billion rupees on revenue of 51.34 billion rupees for Reliance Communications, which had more than 150 million mobile customers as of December in the world's second-biggest mobile market.

Finance charges that include interest costs for the quarter nearly tripled to 3.78 billion rupees from 1.3 billion rupees in the year-ago quarter.

Ahead of the results, shares in Reliance Communications, which has a market value of nearly $4 billion, closed 1.2 percent lower in a Mumbai market that fell 0.5 percent.

Reliance Communications' stock has rebounded this year to be up more than 34 percent, after losing more than half of its value last year, on hopes that the company would be able to cut its debt by raising funds.

The stock has outperformed a nearly 15 percent rise in the benchmark index in 2012 and far outstripped larger rival Bharti Airtel's (BRTI.NS) about 2 percent gain.

(Additional reporting by Sumeet Chatterjee and Prashant Mehra in MUMBAI; Editing by Alex Richardson and Helen Massy-Beresford)