RCOM profit jumps on subscriber boom

1 May 2008

Reliance Communications (RCOM), India’s second-largest wireless operator by subscribers, has reported that its fiscal fourth quarter net profit rose 47% to INR15.03 billion (USD317 million) in the three months ended 31 March 2008. Sales rose by 35% to INR53.11 billion, of which wireless operations generated INR41.6 billion, national and international long-distance operator Reliance Global INR15.26 billion, Broadband INR5.1 billion and Other INR683 million; eliminations were INR9.5 billion. Billionaire Chairman Anil Ambani said his company will spend as much as USD6.5 billion to increase coverage and build a second national network based on GSM technology to challenge the market leader Bharti Airtel. RCOM currently operates a national CDMA-based technology but in October secured the government’s permission to roll out a GSM-based platform countrywide. That network, which is currently operational in eight circles, will be complete by mid-2009, when it will extend to 22 circles in total.

At the end of March 2008 RCOM claimed 45.79 million wireless customers, of which 38.78 million were connected to its CDMA platform and 7.02 million to the GSM network. 90% of all customers are on a pre-paid basis, with 98.9% of the fourth quarter net new additions joining up on a pay-as-you-go basis. Wireless ARPU in the final quarter of the year was INR317, down from INR339 in the previous period while churn remained unchanged at 1.4%.

Ambani added that he is considering listing RCOM’s Globalcom division on the London Stock Exchange this fiscal year. The division includes the operator’s submarine cable business, FLAG Telecom Group and Yipes Holdings, an Ethernet-service provider.

India, Reliance Communications (RCOM)