Competition, the tariff rejig, provisions for foreign exchange losses and the pan-India roll out of its GSM network took a toll on Reliance Communications with net profits falling significantly in the quarter ended September 2009 by 54.8% sequentially to Rs. 7,403 million over revenues that also fell 10.6% to Rs. 54,962.5 million. Net profit was down 51.6% compared to the quarter of Sep 08. Its EBITDA is down to Rs. 20,200 million, with non-wireless EBITDA representing 36% of the consolidated EBITDA. ARPU has also slid to Rs. 161 from Rs. 210 in the previous quarter, while minutes of use fell to 340 from 365. RCOM added 6,501,363 wireless subscribers in the quarter.
Factors that affected the company’s performance were summed up by
Anil Ambani, Chairman, Reliance Communications, “In the near term, the wireless sector in India is undergoing a challenging phase, with increased competitive intensity and continuing aggressive rebalancing of mobile tariffs by all leading players.”
Segment Wise Contribution To Revenues
- Wireless – down to 55% from 62% in June 09.
- Global – up to 31% from 25% in June 09.
- Broadband – risen to 10%
Besides mobile services, RCOM also operates in broadband (Net Connect), fixed wireless (Hello), tower (with Infratel), enterprise services (with Globalcom, under which are subsidiaries Flag, Vanco and Yipes), investment funding, DTH (Big TV), IPTV, BPO and retail (with RWorld and Reliance Mobile Stores) sectors. It had a total of 92 million customers across its divisions as of the quarter of Sep 09.
According to a corporate presentation dated August 2009, GSM non-voice revenue contribution stood at approximately 10%, with SMS contributing around 5% versus CDMA’s 1.2%. Other KPIs for the quarter:
- Its All India wireless market share has dipped from 18.9% to 18.5%.
- Prepaid connections now form 94.4% of its total wireless customers.
- Churn has stood stable at 1.3%.
- Minutes of use increased by 1.2 billion minutes to 84.5 billion minutes.
- Wireless revenue per minute has fallen to Rs. 0.47 from Rs. 0.58 last quarter.
Reliance Big TV’s distribution network is fast catching up to the top DTH providers – it has outlets in 6,500 towns while competitor Dish TV is present in 6,600 towns. Reliance claims Big TV currently has 1.95 million subscribers, about 13% of the DTH market.
Broadband ARPU Up
RCOM’s net additions of access lines has halved this quarter to 17,000 compared to the quarter ended June 09. The average revenue per line has increased to Rs. 1794 from Rs. 1626.
The tower deal with Etisalat DB Telecom India will bring in revenues worth Rs. 10,000 crore to the RCOM group, the investor presentation reports.
Key Developments In The Quarter
September 11 – RCOM GSM launched Big Maps
September 22 – Partnered with Babajob
September 23 – Anil Ambani announced Reliance Infratel’s IPO plans. Read experts of his speech and details of RCOM’s performance on Medianama.
October 6 – RCOM launched 50 paisa Simply Reliance plan