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R-COM Q3FY11 Concall Live: Wireless Revenue At Rs 4447 Cr; 2.8M Active 3G Subscribers

Reliance Communications has declared results for the quarter ended 31st December 2011 with a net profit of Rs 241 crore and total income of Rs 4824 crore. We’re on the earnings conference call:

5:50 PM : Wireless revenue at Rs 4447 crore up by 0.7%QoQ. RPM solid at 44.6 paise per min. The company’s EBITDA margin was at 31.9% and it reported a free cash flow positive for the quarter and full year. 150 million subscribers at the end of the quarter. EBITDA at 1182 crore.

Data network: HSD network in 1000 towns up from 65 towns YoY . 3G coverage in 33 towns in 13 circles along with high speed CDMA network, available in 1300 top towns across the country. 1X data available in 20,000 towns. The company has 2.8 million 3G active customers- highest in the industry.

Reliance Global established World’s 1st global Mediterranean gain way at Cyprus was established, offering direct metro connectivity to Asia.

Industry highlights: Tariff hikes in recent past by all incumbents. We have also revised tariffs upwards in both GSM and CDMA owing to inflationary costs. New subscriber acquisition has slowed down overall.

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150 million customers at the end of December 2011, maintaining a share of 17% of total. Contribution of Non voice revenue to overall revenue is over 20%. Intend to double in in the next 2-3 years.

Cleaned up non-profitable products. Building on on-net community is a focus. Arresting CDMA growth is also a key focus.

R-COM plans to launch a CDMA tablet in the near future. Claims to be the largest data service provider.

6:08 PM : Minutes growth lower than expected & impact of tariff hike: Shamik Das – “We have close to 100 billion minutes. Mainly concentrating on paid minutes. We see that there is good traction- minutes remain steady . RPM of 44.6 paise per minutes. Outlook for the next quarter – We have added close to 3 million customers – Will be a correction on cutting down fat.

6:11 PM : Depreciation has decreased by Rs 76 crore – due to increase in depreciation – first full quarter to see impact of 3G. Also because of Flag – NGN project and because of bringing RTL’s depreciation policy in line.

6:13 PM: Non Voice revenue: Healthiest non-voice revenue- Primarily lead by data revenue- Personalization rich content & affordability. See non voice revenue at 40% in the next 2-3 years.

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6:15 PM: Revenue from tablets is booked under the mobile segment.

6:16 PM: On CDMA platform- It’s a good cash generating business. Initiatives taken to sustain voice part and grow data.

70 CDMA handsets available and added 7 more handsets in the last quarter. Looking for high-end smart phones. We’ll take a lead and launch a CDMA tablet.

3 pronged strategy: Network expansion strategy -1. capital investment for high speed data. 2.Device growth coming from proprietary as well as Open Market Handset.  3. Been built on on-net calling- plans like mera plans to sustain voice.

Upfront cost and fair usage policies in place to retain RPM and cut down fat. Declined to disclose revenues from CDMA business.

Launched new products with an aim to make RCOM the primary SIM with on-net and off-net usage.

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6:23 PM: Towers: 50,000 towers in total  – 1.5: 5 – GSM:CDMA . 11,000 3G BTS.

6:25 PM: Active users’ 3G consumption – Blended 3G ARPUs in excess of Rs 500 – 600. Postpaid at Rs 800-1000 and prepaid at Rs 250-Rs 300. ARPU in MBs – 800MB to 1GB range. Incremental over Voice ARPU – 2.5-3 times.

6:29 PM: RCOM – Total voice traffic at 100 billion minutes. Tremendous growth in data traffic. What’s keeping voice traffic down- With introduction of Mera Pack – Mera Plan – Traffic has started increasing, in the current quarter you should see an upward trend in traffic. Declined to confirm details related to tower sale business.

6:32 PM: On participating in fresh 2G spectrum auction – Will take a call when spectrum comes for auction and then take a call.We do not see any impact of the Supreme Court verdict on business.

On 3G dongle business: Intensity in space is gone up. Incumbent operators have come up with their offerings. Heightened activity leading to accelerated market growth. In no position to share specific numbers. Expects market to double in 3-5 years space.

6:37 PM: Don’t see any change in customer acquisition strategy after the 2G verdict.

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6:42 PM: Network cost has gone up by Rs 122 crore this quarter due to cuts in the Flag submarine cable, maintenance cost, first full effect from 3G. Broadly in range with previous quarters. Rs 90 crore just one time expense.

Increase in tariff: Due to inflationary costs and increase in input costs- markets have accepted. ” We will see how the industry is working on future strategy and take a decision accordingly on further tariff changes.”

Biggest reason for more profitable business – Non voice network is much higher vs any other player – extremely profitable on staff, utility and other p&l side. Don’t pay excess charge – This helps in improving profitability. All data revenue is on-net. “Our margin retention is higher than others.”

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