Rel Comm posts 51% decline in profits due to forex losses

~
Reliance Communications, the nation’s second largest wireless telephony company, on Saturday announced 51% decline in quarterly profit due to forex loss.

RCOM, part of the Reliance Anil Dhirubhai Ambani group, has posted net profit of Rs 740 crore in the September quarter, compared to Rs 1,531 crore in the year-ago period. The forex loss of Rs 283 crore forced the company, which posted a marginal 1% rise in revenue to Rs 5,703 crore, to post a sharp decline in profit.

The results were worse than the expectation. A survey of ETIG and four brokerage houses estimated RCOM’s net sales at Rs 6,356 crore and net profit at Rs 1,171 crore. However, the company would have posted a net profit of Rs 1023 crore, had there been no forex loss.

Bharti Airtel, the nation’s largest, on Friday posted a 13% rise in net profit and 9% revenue growth.

RCOM chairman Anil Ambani said: “ In the near term, the wireless sector in India is undergoing a challenging phase, with increased competitive intensity and continuing aggressive rebalancing of mobile tariffs by all leading players.”

The wireless revenues, main money spinner for the telco, dropped 7.5% to Rs 4010 crore while EBIDTA margin fell 540 basis points to 35.4%. In a statement, the company said higher competitive intensity, aggressive tariff restructuring by the telecom operators and higher network and operational costs owing to a nationwide GSM rollout have impacted wireless segment and EBIDTA margin.

Mr Ambani said : “We believe a forward-looking and conducive regulatory framework by TRAI and DOT, which is already under consideration, to facilitate market driven industry consolidation will be a strong enable to protect and create long term value for all stakeholders.”

The domestic telecom sector is witnessing steeper fall in valuations after the operators reduced tariffs significantly to gain market share. The valuations of Bharti and RCOM slipped 27% and 36%, respectively, in one month. Analysts have downgraded future revenue expectations of the top players citing the sharp fall in average revenue per user due to the recent tariff revision


Also Read

→ SBI earnings climb by 10%

→ JSPL upbeat about future with 6% rise in net profit

→ Nagarjuna construction hopes to register 18% growth this fiscal

→ HUL profit dips 22% on exceptional item loss