Reliance Communications profit up on higher tariffs

Its profit rises by 22 per cent after increasing the voice call rates

Mumbai: Reliance Communications Ltd reported a 22 per cent rise in quarterly net profit after the telecom services provider raised voice call rates by about a fifth earlier this year. Leading Indian mobile carriers raised prices after a 2012 court order revoked some licenses which had increased competition and depressed prices.

Reliance Communications, India's third-largest operator by customers, and its peers have since withdrawn promotional offers, effectively raising prices of voice calls which account for about 85 percent of revenue in the industry. "We see in the coming quarters tariff continue to harden as we take out freebies," Gurdeep Singh, chief executive of the company's consumer business said on a call with analysts after announcing the results.

Controlled by billionaire Anil Ambani, Mumbai-based Reliance Communications reported consolidated net profit of 1.32 billion rupees ($21.7 million) in the quarter to end-June, up from 1.08 billion rupees last year. This fell slightly short of forecasts from analysts who, on average, had expected the company to post a net profit of 1.35 billion rupees for the quarter. Reliance Communications' sales posted a rise of 2.1 per cent to 55.23 billion rupees.

The company said it had 13 million customers using 3G data at the end of the quarter, compared with 12 million in the quarter before. Average revenue per user, a key gauge for profitability, rose 6.3 per cent to 136 rupees. Reliance Communication's rise in profit lagged rivals Idea Cellular Ltd, which posted a 57 per cent rise in net profit for the same quarter, and Bharti Airtel Ltd's 61 per cent surge, also on the back of higher tariffs.

High debt has hurt Reliance Communications' profit in recent quarters. The net debt of Reliance Communications, the most leveraged firm among publicly traded Indian telecom carriers, fell to 355 billion rupees as of Thursday from 401.8 billion rupees at the end of March.

In June, the company raised $804 million by selling shares, the proceeds from which helped pare its debt. Shares in Reliance Communications, which has a market value of roughly $5 billion, closed up 0.9 per cent at 120.90 rupees on Thursday in the Mumbai market ahead of the results, while the main Mumbai market index rose 0.7 per cent.

( Source : reuters )
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