Reliance Communications (RCOM) has reported, on a consolidated basis, net profit of Rs. 250.89 crore for the quarter ended June 30th 2009, down 79.43% from Rs. 1219.5 crore reported for the last sequential quarter. This decline in profitability was on a 0.32% increase in revenues, up to Rs. 5109 crores, from Rs. 5092 crores for the same quarter last fiscal. The company reported a significant increase of 43.14% in its debt-equity ratio, up to 0.73, as net debt rose to Rs. 28,481.3 crore. This has been quite a slide for RCOM, as profit reported in Q1-11 was 84.67% lower than the Rs. 1636.6 crore profit reported for the corresponding quarter last year. Revenue too has declined 16.86% year on year.
RCOMs wireless revenues and EBITDA were flat quarter on quarter, though the segment reported a significant decline in EBITDA of 27.88% year on year, as EBITDA margin fell 29.17% year on year to 28.9%. Competitor Bharti Airtel
The broader trend in the wireless segment has been towards a decline in average revenue per user per month (38.1% year on year), and with increased competition in the market, revenue per minute has also declined (44% down year on year). However, what is rather surprising is a decline in the minutes of use per subsriber, which have also been falling quarter on quarter – from 365 minutes in Q1 last fiscal to 295 minutes this fiscal – a decline of 19.18%.
All of this is symptomatic of the price war and multiple SIM card utilization on telecom networks in India.
The increase in RCOM’s debt is on account of the money raised to pay for 3G spectrum in India, Mint reported. RCOM won 3G spectrum in 13 out of 22 circles, at a price of Rs. 85,85 crore. The company won spectrum in 3 metros (Mumbai, Delhi and Kolkata) and in also all those circles in which it has GSM operations.
RCOM claimed a subscriber base of over 110.8 million as of June 30, 2010, representing a market share of 17.6%. It said that it is the second largest seller of mobile handsets/devices in the country, and has nearly 60% market share of the data card and USB modem market for laptops and PCs, apart from being the largest PCO operator in the private sector. In terms of broadband, it operates in 44 cities in India with close to 1,049,900 buildings, serving close to 1.47 million access lines. Its DTH operations, Reliance Big TV, currently has 2.6 million subscribers, about 12% of the DTH market.
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