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Reliance Comm Q1 profit slips 15% despite fall in expenses

Reliance Comm Q1 profit slips 15% despite fall in expenses

The News International Team

Telecom operator  Reliance Communications has reported a 15.4 percent decline in first quarter (April-June) consolidated net profit at Rs 132 crore due to lower other income despite sharp fall total expenses. Profit in previous quarter was Rs 156 crore (which was boosted by tax write-back of Rs 1,026 crore).

Consolidated revenue declined 1 percent to Rs 5,354 crore in the quarter (lower-than-expected) ended June 2014 from Rs 5,405 crore in previous quarter impacted by slow growth in Indian operations and fall in global revenue.

Analysts had expected the Anil Dhirubhai Ambani Group company to report net profit of Rs 47 crore on revenue of Rs 5,572.8 crore for the quarter.

“Indian business revenue increased by 1.5 percent sequentially to Rs 4,718 crore with earnings before interest and tax (EBIT) growth of 15.5 times to Rs 883 crore while global business declined 14.9 percent to Rs 1,073 crore with 75 percent rise in EBIT at Rs 49 crore,” said the company in its filing.

Operating profit (EBITDA) rose by 6.8 percent quarter-on-quarter to Rs 1,694 crore and margin expanded by 230 basis points to 31.6 percent, which both were lower than analysts’ expectations of Rs 1,878.3 crore and 33.7 percent, respectively.

Other income dropped 36.5 percent to Rs 169 crore from Rs 266 crore on sequential basis while total expenses fell by 17.8 percent to Rs 4,591 crore from Rs 5,586 crore during the same period due to lower employee cost (down 10.7 percent), depreciation, impairment and amortisation cost (down 47.3 percent) and other expenditure (down 3 percent).

Finance cost during the quarter reduced by 15.4 percent Q-o-Q to Rs 767 crore, said the company, adding net debt declined from Rs 40,178 crore to Rs 35,500 crore as on June 2014.

Reliance Communications raised Rs 6,108 crore through QIP and preferential issue and subsidiary Global Cloud Exchange raised Rs 2,100 crore (USD 350 million) through 5-year international bonds, which both may have helped the company to reduce debt.

Tax expenses were Rs 1 crore in the quarter gone by as against tax write back of Rs 1,026 crore in March quarter.

The company showed strong improvement in its key performance indicators with revenue per minute (RPM) rising to 43.8 paisa from 43.2 paise on sequential basis and voice RPM at 33.3 paisa. “During the quarter, we have significantly improved RPM with tariff hikes and strong focus on paid and profitable minutes,” the company elaborated.

Average revenue per user (ARPU) jumped to Rs 136 in Q1FY15 from Rs 128 in Q4FY14 while minutes of usage (MOU) jumped to 103.1 billion from 102.3 billion quarter-on-quarter.

The scrip of Reliance Communications, which announced earnings post market hours, rose 0.75 percent to Rs 120.70 on the BSE.

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