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Our Bureau

Merger of Reliance Infocomm to be completed by year-end

Mumbai , May 1

An across-the-board reduction in expenditure has helped Reliance Communications Ventures report a 42 per cent sequential increase in its consolidated net profit for the fourth quarter ended March 31, 2006, despite a flat growth in total revenues.

Net profit (before extraordinary items) for the quarter amounted to Rs 440 crore, up from Rs 310 crore for the quarter ended December 31, 2005. The net profit was Rs 403 crore, including extraordinary items, namely, employee restructuring costs of Rs 37 crore.

Service revenues amounted to Rs 3,089 crore, up 3 per cent sequentially, but flat after a deduction of Rs 119 crore towards deferment of revenues from Lifetime Free incoming plans.

Expenditure was pruned by 10 per cent to Rs 1,928 crore (Rs 2,143 crore); the company reported decreased access charges and network charges, as well as decreased employee costs and selling and general expenses.

EBITDA increased by 23 per cent, to Rs 1,042 crore (Rs 848 crore), while EBITDA margins rose to 35 per cent, from 28 per cent.

EBITDA margins of the wireless business, which acquired 3.2 million customers in the quarter, rose to 36 per cent (32 per cent); that of the international voice and data business to 19 per cent (15 per cent) and that of the broadband business to 31 per cent (20 per cent).

Interest costs, at Rs 42 crore (Rs 128 crore) were down by two-thirds, while depreciation and amortisation costs rose to Rs 546 crore from Rs 398 crore.

The proforma consolidated financial results relate to RCVL and its operating companies, including Reliance Infocomm Ltd (RIC), Reliance Communications Infrastructure Ltd (RCIL), Reliance Telecom Ltd (RTL), and FLAG Telecom Ltd (FLAG), said a company statement.

In the interests of better disclosure, said the company, the proforma numbers have been prepared "as if the proposed corporate reorganisation (previously announced) had been implemented for the quarter".

The Board of RCVL in March this year approved a reorganisation including the merger into RCVL of Reliance Infocomm. The formalities are expected to be completed by the third quarter of the current fiscal.

Inclusion in IndexRCVL will be included in the benchmark index, the BSE Sensex, from June 12, just three months after the company's listing on the bourses.

Formed by the demerger of the telecommunications undertakings of Reliance Industries Ltd, RCVL was listed on the BSE and the NSE on March 6.

The company's market capitalisation as on April 29 was Rs 65,000 crore. Its net worth is Rs 11,742 crore, and its net debt Rs 3,293 crore. Its debt-equity ratio is 0.28:1, allowing it the capacity to add over Rs 8,000 crore of leverage to the balance sheet, the company said.

The EBITDA margin of the wireless business was achieved by customer acquisitions, economies of scale, cost efficiencies and productivity gains, said a statement from RCVL. The company's global business through FLAG Telecom showed margins growth through volumes growth in long distance voice and international data as well as through cost efficiencies. The broadband business grew 54 per cent in revenues sequentially.

Related Stories:
Reliance Communications Q3 net profit at Rs 310 cr

More Stories on : Financial Performance | Telecommunications | Financial Performance

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