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Relaince Communications plans to withdraw customer discounts

The company has increased its base tariff for voice calls

New Delhi: Reliance Communications Ltd, India's fourth-biggest mobile carrier, said that it would focus on further withdrawing customer discounts and improving its profitability as its quarterly profit fell by almost half.

Carriers in the highly competitive Indian market have seen some pricing power return in 2013, after a court order forced some of their smaller rivals out of the market. They have withdrawn promotional offers, effectively raising prices of voice calls, which account for about 85 percent of revenue.

Mumbai-based Reliance Communications increased voice call prices by about a fifth late last month and also increased the base tariff for voice calls. "We'll continue our thrust to focus on paid and profitable minutes, continue to reduce promotional and free minutes," said Gurdeep Singh, Chief Executive, Consumer Business.

Reliance Communications, controlled by billionaire Anil Ambani, said consolidated net profit fell 48.5 per cent to 1.56 billion rupees ($26 million) for its fourth quarter ended March 31, from 3.03 billion rupees reported a year earlier.

With net debt of $6.7 billion, or more than five times its operating profit, Reliance Communications is the most leveraged among publicly traded Indian telecom carriers. The debt load has hurt its profit in recent years. Planned sales of assets, including stakes in its tower and submarine cable units, to cut its debt have not materialised. Singh said the company was ‘extremely focused’ on reducing its debt, without saying if it was involved in any talks to sell assets. Consolidated net profit for the latest quarter was helped by a tax reversal of 10.26 billion rupees. But finance costs jumped more than a fifth from a year earlier to 9.07 billion rupees and depreciation and amortisation costs rose 62 percent to 17.67 billion rupees.

Net income from operations rose 5.3 per cent from a year earlier to 54.05 billion rupees. Monthly average revenue per user, a key metric for telecoms carriers, rose 2.4 per cent from the previous quarter to 128 rupees, while realisation per minute was little changed at 0.432 rupees.

Reliance Communications had 12.9 million 3G customers at the end of fourth quarter, it said. Shares in the firm, valued at more than $4 billion, closed 0.3 per cent lower ahead of the results in a Mumbai market that edged down about 0.1 per cent. The stock is down by 6 per cent, after surging more than 75 per cent last year on its network-sharing pact with the 4G telecoms unit of Reliance Industries.

( Source : reuters )
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