Reliance Communications sees profit fall

NEW DELHI Wed Jan 23, 2013 8:01pm IST

1 of 2. A customer leaves a Reliance communication store in Ahmedabad January 23, 2013.

Credit: Reuters/Amit Dave

Related Topics

Stocks

   

NEW DELHI (Reuters) - Reliance Communications Ltd(RLCM.NS), India's No.3 mobile phone carrier by customers, reported a decline in profit for the second straight quarter as its finance costs jumped.

Consolidated net profit at the carrier, controlled by billionaire Anil Ambani, fell a sharper-than-expected 44 percent to 1.05 billion rupees for its fiscal third quarter ended December, from 1.86 billion rupees a year earlier.

Gurdeep Singh, chief executive of Reliance Communications' wireless business, attributed the bigger-than-expected profit fall to a jump in interest costs as the company last year refinanced foreign currency convertible bonds (FCCBs) of $1.18 billion through loans from a clutch of Chinese banks.

However, the company saw growth in key operating metrics such as average revenue per user in the December quarter, Singh said in a phone interview.

Reliance Communications' net debt of about $6.9 billion as of December, or more than five times its annualised operating profit, makes it the most-leveraged Indian phone carrier. The company has so far had little success in its efforts to raise funds via stake sales in its units.

A planned sale of its telecommunication tower unit that had been expected to raise about $3 billion has dragged on for more than two years. The company hopes to sell a stake in the unit in this year, Ambani told shareholders in September.

In July, it was forced to shelve a Singapore public offering of its undersea cable unit due to weak investor demand and has said it will attempt again to list the unit.

The outlook for bigger phone operators like Reliance Communications and its main rivals, Bharti Airtel Ltd (BRTI.NS), Vodafone Group Plc's (VOD.L) local unit and Idea Cellular Ltd (IDEA.NS), has improved as a court order to revoke permits of several smaller carriers is expected to reduce competition.

Carriers in the world's second-biggest mobile phone market, however, face an uncertain regulatory environment and have been asked to pay new fees for airwaves.

Revenue rose an annual 5 percent to 53.01 billion rupees. Analysts had expected the company to report a net profit of 1.83 billion rupees on revenue of 52.80 billion rupees, according to Thomson Reuters I/B/E/S.

Reliance Communications' finance costs, which include interest expenses, rose 59 percent to 6.05 billion rupees in the December quarter from 3.81 billion rupees a year earlier. Operating (EBITDA) margin for the quarter fell to 31.2 percent from 31.9 percent a year earlier, it said in a statement.

Monthly average revenue per user grew 17 percent sequentially to 119 rupees, while minutes of usage per subscriber rose 15 percent sequentially to 271 minutes, Singh said. Revenue per minute was at 0.44 rupees for the quarter.

Ahead of the results, Reliance Communications shares valued at about $3.4 billion closed 0.5 percent higher after rising as much as 3 percent on hopes that rivals will follow market leader Bharti Airtel (BRTI.NS) in raising call prices.

(Additional reporting by Aradhana Aravindan; Editing by Matt Driskill and Elaine Hardcastle)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

FRESH RULES

A man speaks on his mobile phone in front of the Reserve Bank of India (RBI) seal at the RBI headquarters in Mumbai July 30, 2013. REUTERS/Vivek Prakash/Files

RBI says all companies must apply 2-step payments for credit cards

The Reserve Bank of India said that all transactions involving domestic credit cards must follow rules requiring additional verification, a stance that could impact companies such as Uber Technologies Inc that provide more simple app-based purchases.  Full Article 

REUTERS SHOWCASE

Record Highs

Record Highs

Nifty touches record high; software stocks gain.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

Pricing Mechanism

Pricing Mechanism

Govt sets up a four-member panel to re-examine gas pricing.  Full Article 

Royalty Rates

Royalty Rates

India to hike iron ore royalty, miners may struggle to pass on extra cost.  Full Article 

Diesel Deregulation

Diesel Deregulation

Oil ministry to seek Cabinet nod on diesel deregulation - sources  Full Article 

Commodities

Commodities

Gold near two-month low; set for weekly drop on interest rate fears  Full Article 

Reuters Exclusive

Reuters Exclusive

Apple iPhone 6 screen snag leaves supply chain scrambling   Full Article 

Helping Regional Mills

Helping Regional Mills

Govt raises sugar import duty to 25 pct from 15 pct.  Full Article 

Curbing Risks

Curbing Risks

RBI to lower ceiling on bank loans to a single corporate group.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage