RCom, earnings rise 21% in Q1

16 Aug 2014

Reliance Communications (RCom) has posted a 22-per cent rise in first quarter earnings, buoyant on an increase in voice revenues, while data also contributed substantially.

In the seasonally weak first quarter, dampened mainly by the monsoons, the company posted an estimate beating 22 per cent rise in consolidated net profit at Rs132 crore, compared with Rs108 crore posted during the comparable quarter a year ago.

The company's revenues were nearly at Rs5,354 crore, compared with Rs5,315 crore recorded during the same period a year ago.

The Anil Ambani company, had discounted discounts and raised call tariffs in April.

The Mumbai-based company's average revenue per user, a metric to gauge the financial strength of a telecom company, rose 14.3 per cent to Rs136 from a year earlier. The company's revenue per minute, another financial metric, rose 4 per cent to 43.8 paise from that a year ago.

RCom had 28.6 million data customers as of June end, including 13 million 3G customers, while its data traffic rose 78 per cent during the quarter to 55,276 million MB from the year-ago period.

In June, RCom raised Rs6,100 crore through a stake stale to institutional investors, or qualified institutional placement (QIP) and preferential allotment to promoters, which was used to repay debt and reduce interest cost.

This has helped the company reduce net debt to Rs35,500 crore as on date, compared with Rs 40,178 crore as of 31 March.

''All the proceeds of the QIP are being used to repay debt and reduced interest cost by over Rs 600 crore annually, which will accrue from the second quarter of this financial year,'' RCom's CEO Vinod Sawhny said in an analysts' call, adding the company intends to bring down the debt to Rs25,000 crore through these initiatives in the next 12 months.

The debt reduction will take place through various measures such as securitisation of the tower receivables, disposal of non-core assets and monetisation of the real estates.

From this quarter onwards, the company is revising the definition of data customer to include only those who use at least 1 MB of data in a month, he added.

The company's revenues from India operations rose 1.3 per cent to Rs4,718 crore from Rs4,659 crore posted during the same quarter of previous financial year.

RCom's cash outflow for spectrum would be minimal, as the company has only seven circles in the 900 MHz band that come up for renewal in FY'16. The company's other circles come up for renewal in FY'21.