Riding on a provision write-back, Reliance Communications (RCom) has posted a leap in consolidated net profit at Rs 675 crore in the second quarter ended September 30.
During the quarter under review, the operator’s net profit surged more than six-fold from Rs 102 crore recorded during the same period a year ago. Excluding the write-back (following a business restructuring undertaken 2006-07) of Rs 441-crore provision, its net profit rose 129.4 per cent to Rs 234 crore.
“The rise in net profit is better than our expectations. Going forward, banking on the rise in call tariffs and lesser competition, RCom is expected to post better earnings on a quarter-on-quarter basis,” said Kishor P. Ostwal, Chairman and Managing Director at brokerage firm CNI Research.
Revenues rise
The company, controlled by billionaire Anil Ambani, posted a 3.7 per cent rise in revenues to Rs 5,394 crore (from Rs 5,202 crore).
Its revenues from domestic operations grew 5.4 per cent to Rs 4,624 crore, even though that from global operations dipped 0.3 per cent to Rs 1,139 crore.
During the quarter under review, the country’s fourth-ranking operator generated operational cash flow of Rs 2,328 crore and paid net finance charges of Rs 676 crore.
The operator revenues per minute, a key financial metric, rose 7.7 per cent to 43.4 paise on tariff hikes and focus on paid and profitable minutes. The Mumbai-based company had deactivated about 10 million unprofitable and low-end subscribers, in line with the industry practice, during the past two months, it had said in earlier statement.
The company was elbowed out of its third ranking by Idea Cellular, following the deactivations of users. RCom, which straddles both CDMA and GSM technologies, had about 116 million users on its network as of September 30.
ARPU up 26%
RCom’s total Minutes of Usage (MOUs) fell by 1.7 per cent to 101.5 billion, due to seasonality and subscriber deactivations.
However, average revenues per user (ARPUs), a metric to gauge the financial health of the telecom company, rose 26.3 per cent to Rs 120.
Ahead of the results, RCom shares fell 5.18 per cent to Rs 129.15 on Tuesday.
According to CNI Research’s Ostwal, the counters were weak because shareholders in the company are generally long-position (holding for longer periods) holders.