Reliance Communications, the country's second-largest telecoms 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 last 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 Rs 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 its profits and margins, and also that of the industry for the considerable future. The company's debt stood at Rs 32,048 crore for the year ended March 2011.
The telco's net profit fell to Rs 169 crore for the three-months ended March 2011, compared to Rs 1,220 crore for the corresponding period last year.
But sales were up 55% at Rs 7,876 crore during this period against Rs 5,092.8 crore for the three months ended March 10. Earnings before interest, tax, depreciation and amortization ( EBIDTA )) jumped significantly to Rs 4,122 crore in fiscal 2011 from Rs 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 Rs 1,401 core compared with Rs 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. In comparison, Airtel's ARPU, which declined 12% during the same period was at 194 as of March 2011-end. For the full year, RCOM's net profit fell 71% to Rs 1,346 crore from Rs 4,655 crore.
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RCOM's results are a pointer that 3G launch costs and interest payouts for thousands of crores in loans will continue to squeeze its profits and margins, and also that of the industry for the considerable future. The company's debt stood at Rs 32,048 crore for the year ended March 2011.
The telco's net profit fell to Rs 169 crore for the three-months ended March 2011, compared to Rs 1,220 crore for the corresponding period last year.
But sales were up 55% at Rs 7,876 crore during this period against Rs 5,092.8 crore for the three months ended March 10. Earnings before interest, tax, depreciation and amortization ( EBIDTA )) jumped significantly to Rs 4,122 crore in fiscal 2011 from Rs 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 Rs 1,401 core compared with Rs 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. In comparison, Airtel's ARPU, which declined 12% during the same period was at 194 as of March 2011-end. For the full year, RCOM's net profit fell 71% to Rs 1,346 crore from Rs 4,655 crore.
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