RCOM revenue, net profit tumble as tariff war rages on

17 May 2010

India’s second largest mobile network operator by subscribers, Reliance Communications (RCOM), has released its financial results for the three- and twelve- month periods ended 31 March 2010, posting a quarterly drop in net profit as the effects of a tariff war spurred by hyper-competition took their toll. For the company’s last quarter of FY2009/10 it generated a net profit of INR12.195 billion (USD267.1 million), down 16.1% from the INR14.544 it reported in the same period a year earlier. Annual net profit also fell, down 11.9% year-on-year at INR46.55 billion. As call prices have fallen for consumers, so has the revenue generated by RCOM, and in the three months to end-March 2010 it had a turnover of INR50.928 billion, a 16.8% drop against the INR61.237 billion in the corresponding period in 2009. Full-year revenue meanwhile was down 3.6% y-o-y at INR221.323 billion. As expected, the impact of competition in the country’s wireless sector saw average revenue per user (ARPU) display a similar downward trend, standing at INR139 for 4Q 2009/10, down from INR224. Quarterly earnings before interest, tax, depreciation and amortisation (EBIDTA) for the telco was INR16.02 billion, plunging 32.8% against 4Q 2008/09, with annual EBITDA for the 2009/10 year down 15.9% compared with the previous twelve-month period, at INR78.205.

While economic indicators have faltered, RCOM has continued to expand its customer base, and at end-March 2010 the telco had 102.42 million wireless customers, having added more than eight million in the first three months of 2010.

India, Reliance Communications (RCOM)