UPDATE 1-India's Reliance Communications sees profit fall

Wed Jan 23, 2013 7:36pm IST

Stocks

   

* Net profit at 1.05 bln rupees vs 1.83 bln rupees consensus

* Revenue up 5 pct from year earlier, beats estimates

* Reliance Comm struggling with $6.9 bln debt (Adds details, company comment)

By Devidutta Tripathy

NEW DELHI, Jan 23 (Reuters) - Reliance Communications Ltd , 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 ($20 million) 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, Vodafone Group Plc's local unit and Idea Cellular Ltd , 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 in raising call prices. ($1 = 53.8150 Indian rupees) (Additional reporting by Aradhana Aravindan; Editing by Matt Driskill and Elaine Hardcastle)

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

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Cook Comes Out

Cook Comes Out

Apple's Cook: "I'm proud to be gay"  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

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