Reliance Communications Profit Falls 80% In Second Quarter

Reliance Communications Ltd. on Monday reported an 80 percent decline in its net profit due to increase in spectrum usage charges and finance cost. Net profit in the quarter-ended September fell to Rs 39 crore, the company said in a filing on the stock exchanges.

Competition, migration of CDMA customers to 4G LTE and seasonality pulled its revenues 3 percent lower to Rs 5,090 crore in the same period.

Total expenses increased to Rs 4,433 crore in the reported quarter as compared to Rs 4,523 crore in the same period of last year, the filing added. Finance cost surged 15 percent to Rs 825 crore, while the total debt stood at over Rs 50,000 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 15 percent to Rs 1,500 crore, while the EBITDA margin contracted by 368 basis points to 29.4 percent

Realisation per minute fell 1 percent to 44.6 paise quarter-on-quarter, while the average revenue per user was declined 5 percent to Rs 155, for the quarter-ended September.

Reliance Communications is one of the worst performers on the BSE Telecom index. The stock price has fallen 53 percent year-to-date, while BSE Telecom index slipped 21 percent in the same period. Of the total 20 analyst tracked by Bloomberg, only 15 percent have a ‘buy’ rating on this stock.

Foreign brokerages like HSBC, Credit Suisse, Bank of America Merrill Lynch and Morgan Stanley have maintained a cautious stance on Reliance Communications after the announcement of its merger with Aircel.