RCOM Q4 Net Plummets 86% to 169 cr

Reliance Communications, the country's second-largest telecom company by subscribers, missed street forecasts to post a bigger than expected 86% decline in quarterly profits, its seventh straight fall, despite call tariffs in the country stabilising over the past 12 months. 

The company, owned by billionaire Anil Ambani, attributed its steep decline in quarterly profits to a sharp spike in interest costs to service rising debts, higher costs of operations and fall in average revenue per user. "During the period, company reported mark-to-market net loss of over . 1,100 crore due to currency fluctuations," president and CEO (wireless business) Syed Safawi said. RCOM's results are a pointer that 3G launch costs and interest payouts for thousands of crores in loans will continue to squeeze profits and margins, and also that of the industry in the considerable future. The company's debt stood at . 32,048 crore for the year ended March 2011. The telco's net profit fell to . 169 crore for the three-months ended March 2011, compared with . 1,220 crore for the corresponding period last year. 
But sales were up 55% to . 7,876 crore during this period, against . 5,092.8 crore for the three months ended March 10. Earnings before interest, tax, depreciation and amortisation (EBIDTA) jumped significantly to . 4,122 crore in fiscal 2011 from . 1,602 crore in the previous year. Reliance's primary competitor, Bharti Airtel, had posted a 31% drop in fourth-quarter profits, weighed down by its loss-making African operations. Bharti's income for the three months to end-March fell to . 1,401 core compared with . 2,044 crore in the year-ago period. Excluding its Africa business, Bharti's profits from India and South Asia fell 15%. RCOM's average revenue per user fell 23% over the last 12 months to . 107.