RCom Q1 net profit down 85 p.c Y-o-Y

MUMBAI, INDIA: Reliance Communications, India's No. 2 mobile phone operator, reported a bigger-than-expected fall in June-quarter profit as sharply lower call charges after a vicious price war hit margins.

The net profit fell 85 per cent to Rs251 crore for its fiscal first-quarter, compared with Rs1,637 crore reported a year earlier.

While the revenues for the first quarter of 2010-11 stood at Rs.5,109 crore, against Rs.5,093 crore for the quarter ended March 31 but said its profits declined due to exchange variations.

The earnings before tax, depreciation and amortization was, nevertheless, 1.9 per cent higher at Rs.1,632 crore, against Rs.1,602 crore during the quarters under review, said the company in its results, announced after the closing bell of stock markets.

RComm, however, said its customer base stood at 111 million as on June 30, up 39 per cent over 80 million on the corresponding date of the previous year, even as usage increased by 13.3 per cent during the quarter to 94.4 billion minutes from 83.3 billion minutes.

During the April-June quarter, the company's board approved a $11 billion deal to create what they described as the world's largest independent telecom infrastructure entity, neither owned nor controlled by any telecom entity.

"This transformational deal will be implemented through a de-merger of Reliance Infratel's tower assets into GTL Infrastructure," said the company, adding that 200,000 km of fibre optic cable network and related assets will remain with the group.

This apart, the company also decided to induct a strategic investor into the company for an up to 26 percent equity stake, but did not elaborate with which companies globally or in India the talks were proposed.

During the quarter, the company also acquired cable TV service provider Digicable to have a combined subscriber base of 11 million to further integrate the company's presence in the direct-to-home TV, broadband and voice services space.