The Hindu Business Line : RCom net rises 24%

Mumbai, July 31 Higher subscriber additions coupled with strong growth in its broadband business helped Reliance Communications report a 24 per cent rise in net profit, even as the average revenue generated from per subscriber continued to decline.

The Anil Ambani-controlled firm reported a net profit of Rs 1512.1 crore, against Rs 1,220.4 crore in the corresponding quarter a year ago. Total income generated by the company increased 23.6 per cent to Rs 5,322.1 crore (Rs 4,303.7 crore).

“The company has maintained strong operating performance; since we have speeded up our investment in technology, we expect an accelerated pace of growth going forward,” Mr Anil Ambani, Chairman, said in a conference call with analysts. The company has plans to invest between Rs 40,000-50,000 crore by fiscal 2009.

Per user revenue

However, this quarter’s growth is the slowest recorded by the company, in comparison with the previous nine quarters, largely due to constantly declining average revenue per user or ARPU, analysts said.

The ARPU for RCom has shown a dip of 12 per cent on a sequential basis. It has gone down to Rs 282 from Rs 317 reported in the March quarter, according to Mr Priyank Chandra, Research Analyst, Dolat Capital Market Ltd.

ARPU is down because of a decline in tariffs for both PCOs and mobile services, said Mr S.P. Shukla, President, Reliance Communications. “As we continue expanding our PCO and mobile business in the rural pockets of the country, we expect the ARPU to stabilise in subsequent quarters,” he said.

Recently, RCom became the fifth mobile operator in Asia to cross 50 million wireless subscribers; it added 1.74 million new mobile subscribers during June 2008. The company’s broadband business grew the fastest; it went up by 46.2 per cent to Rs 560 crore (Rs 383 crore).

Schedule VI

The company had followed Schedule VI of the Companies Act instead of Accounting Standard 11 in the matter related to forex fluctuations with respect to liabilities and borrowings for acquisition of fixed assets.

Had the company followed AS-11, its net profit would have been lower by Rs 109 crore for realised and Rs 954 crore for unrealised currency fluctuations during the quarter, said the company’s notes to the accounts. This could exclude an amount of Rs 399 crore on FCCBs if the bonds are converted on or before their due dates.

On Infratel

On being queried about when Reliance Infratel — RCom’s tower infrastructure arm — would be listed, Mr Ambani said the company is waiting for better market conditions. The company has already received approval from the Securities and Exchange Board of India for this.

The RCom scrip closed at Rs 500.5, down by 0.47 per cent on BSE on Thursday.

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