RCOM net profit down 3.3% despite record subscriber additions

1 May 2009

India’s second largest mobile operator by subscribers, Reliance Communications (RCOM), has revealed a 3.3% year-on-year decline in net profit for the three months ended 31 March 2009, a narrower fall than expected. RCOM reported net profit for the quarter at INR14.54 billion (USD292.1 million), down from INR15.03 at end March 2008, while revenue rose 15.3% y-o-y to INR61.24 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) were up 2.9% to INR23.83 billion. RCOM attributed the decline in net profit to the increased costs of expanding its GSM-based infrastructure, although the expansion has led to significant subscriber growth. In the three-month period RCOM added 11.3 million subscribers, the most ever in a single quarter for the cellco, bringing its total to 72.7 million; the company claimed it had 25.6% of all subscriber additions in the period.

In separate but related news Bloomberg notes that RCOM plans to invest USD2 billion in the next fiscal year, having spent approximately USD3.8 billion this year, around 24% less than the company had planned. The 2009/10 investment figure however does not include 3G equipment however, on which RCOM is expected to spend between USD400 million and USD800 million.

India, Reliance Communications (RCOM)