Reliance Communications (RCOM) reported a consolidated net profit of Rs 171 crore for the quarter ended Q3FY16, up 9.61% from Rs 156 crore in the preceding quarter. The company’s internet connections for the quarter also increased to 38.8 million from 37.2 million in the preceding quarter. Here are some of the highlights from the concall.
Liberalization of spectrum: RCOM had applied for liberalization of its allocated spectrum in 800MHz band in 20 circles. The company claims to now have liberalized 800MHz spectrum in 18 of the 22 circles.
On call drops: On 16th Oct 2015, regulations for Call Drop were issued by TRAI effective from Jan 01, 2016. USPI and COAI have challenged these regulations before Delhi High court. After hearing the parties at length, the High Court has reserved the order.
Facebook Tap: RCOM has partnered with Facebook to launch a service called “Facebook Tap”. The service enables customers to use Facebook without a data pack or data charges. A digital switch on customers Facebook pages will enables them to toggle between ‘Go to Free’ and ‘View Photos’ mode. In ‘Go to Free’ mode customers can send text messages & post without any data pack or charge. To view photos, customers need to tap on the ‘View Photos’ mode for which they will be charged as per the regular data tariff.
On Aircel & MTS merger: The combination of RCOM, Aircel & MTS will create an entity that will be amongst the top 3 by RMS in 13 out of 22 circles and hold nearly 20% of commercially allocated spectrum. Along with the DoT approval, the company hopes to get all the necessary approvals in the next 90-120 days for the MTS merger.
On 2G license expiry in 5 circles: Gurdeep Singh,CEO (Consumer Business), said “Yes, we did lose subscribers in these five circles but they were at the bottom of the rank in terms of utilization and profitability. Our objective was to retain all profitable customers, profitable towns, profitable geographies, which we did through the 3G expansion. Most of these subscribers that we have retained nearly stack up to the profit or EBITDA margin that we received from these five circles.”
On migrating from 3G to 4G: Singh said, “For some time to come there is a scope to continue to get consumers on both as long as they give you a faster return on capital. Will 3G fade out faster than we imagine? The answer is yes, but it isn’t happening within short term. Also, let’s not forget, there are millions of consumers who are at a 2G level, who will also need to be migrated to 3G, whereas our preferential migration will be to leapfrog them to 4G in the future. But that is too much of an execution on the ground. So we will have to keep both the things in view.”
On the matter of continuing to invest in 3G, he said, “We have taken a calibrated approach, we’ve looked at the markets where the returns on the investments can be as short as possible and we are only considering those areas today for our expansion, including the Metro of Delhi and Mumbai and Kolkata, where due to geographical expansion of the municipal and the NCR areas, one needs to augment the networks.”