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Q4-09: RCOM Q4 Net Profit Drops By 3% To Rs. 14.54 Bn; Broadband Profits Rebound To 9%; Churn & ARPU Down; 11.3 M Wireless Subs Added

(By Preethi J & Nikhil Pahwa)

rcomm_logonewReliance Communications recorded a consolidated net profit of Rs 14,543.1 million, down 3.25% from the same quarter last year. For the year, net profit was up 9.4% to Rs 59,075.5 million from Rs 54,011.4 million recorded for FY08. Net Income from operations is Rs. 55,228 million, up by 11.6% from Rs.49487 million for the corresponding quarter last fiscal.

Its EBITDA has risen by 13.3% to Rs. 92,880 million and EBITDA margin is stable at 40.5%.


More: Quarter on Quarter changes for FY08 and FY09

RCOM owns the mobile business, telecom business Reliance Infratel, international arm Globalcom under which subsidiaries Flag, Vanco and Yipes exist, Enterprise division which offers broadband, leased lines, VPNs to corporates and Home – the DTH (Big TV) and IPTV. Other businesses under it include technology services, BPO and retail (RWorld and Reliance Mobile Stores).

Details: Release | Consolidated Financials | Standalone Financials

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Segment-wise Results

It’s interesting to note that the revenue contribution of Reliance Globalcom to RCOM revenues is growing  significantly. Detailed segment-wise results are here.

Globalcom To Expand To Bahrain; Vanco-Flag Team Up

Globalcom’s revenue grew by almost 12% in the quarter to Rs 18,803 million. It’s profits (before tax) grew by 26% to Rs 2,858.6 million from the previous quarter. Globalcom is  expanding its retail footprint to new territories such as Bahrain and will launch audio and video conferencing for corporates, an investor presentation dated February has said.

Vanco, a subsidiary under the division, has over 220 multinational clients. Combining this clientele with Flag Telecom’s reach, RCOM expects to offer “high margin” VAS to enterprise customers. The company will leverage the Vanco sales team to cross and up sell to enterprises.

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Wireless Profits Fall; GSM Plan

Consolidated revenues for the wireless segment were flat – up only 2% at Rs. 45,015 million, from Rs. 44,119 million in Q3. The contribution of wireless to total revenues has come down from 65% in Q109, to 61% in Q409.

Profit before tax has dropped by 7% to Rs 9,020 million from the previous quarter and by 17.9% when compared to the same quarter last fiscal.

In January, Rcom launched GSM services in 14,000 towns. This will be expanded to 24,000 towns and 1 billion connections by June, the presentation said. The company plans to replicate its success with CDMA service in GSM. With its dual service, it has a share of 30% of all circles. It expects GSM to draw in more VAS revenues with SMS contributing to 5% of non-voice revenues compared to 1.2% in CDMA. Reliance launched postpaid GSM in Mumbai in April.

Key Performance Indicators: 11.3 M Subscribers Added; Churn Down; ARPU Down

Reliance added a record 11.3 million subscribers during the quarter, which was 26% of net market additions. This took its total to 73 million and has boosted its market share up to 19%. Its churn rates have also dipped to an all time low of 0.8%. The percentage of prepaid customers has risen from 92% to 94%.

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Reliance increased its town coverage from 11,000 to 20,000.


RCOM’s ARPU has dropped to Rs 224 from Rs 251 in the previous quarter. It recorded 75 billion minutes of use, which means MOU per user has increased to 1027.

Broadband Profit Rebounds To 9%; 1.4 M Subscribers

After slipping into negative growth of 11% last quarter, RCOM Broadband saw a rebound in consolidated profits before tax with a rise of 9% to Rs 2,090 million over revenues of Rs 7,075 million on a quarter on quarter basis. On a year on year basis, consolidated revenues rose by a respectable 41% to Rs 25,242.7 million. RCOM had launched NetConnect Broadband Plus, a high speed internet service with download speeds of 3.1 Mbps. This will be available in 35 major cities, the company has announced.


It added only 50,000 customers during the quarter, which is much lower than its additions in previous quarters. Its customer base edged up to 1.4 million and the average revenue per line rose to Rs 1735.


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Reliance’s DTH service Big TV will be tapping Reliance ADA Group’s existing customer base to gain marketshare. Big TV is bullish about the TV market in India, which has potential to become one of the largest Pay TV markets as it has a TV penetration of only 54%.

WiMAX; Tower Business

RCOM has launched WiMAX in the four metros as well as Pune, Hyderabad, Ahmedabad, Baroda and Surat. It is currently building its spectrum bank and will base its delivery centre in Mumbai to take advantage of low costs and scalability the city offers.

It expects to have 55,000 multi-tenancy towers by mid-2009, an addition of 24,000 over the year.


The integration of telecom, media and IT will be the key to future growth for RCOM. It has been constantly growing and now is the time for it to take stock and look at cross selling within its own empire. This will not only give it a boost in terms of customer base but will help it bring in more cohesion.


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Reliance ADAG Launches BIG Productions; All The BIG Businesses
RCOM Launches Netconnect Broadband Plus With Upto 3.1 Mbps Wireless Download Speed; 3G, WiMAX?
Q309: RCom VAS Revenues Up Just 2.7% At At Rs. 113.9 Crores/Month

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