RCom Q3 profit falls 57 p.c. YoY

NEW DELHI, INDIA: Reliance Communications (RCom), India's second-biggest mobile carrier by customers, reported a sixth straight quarter of falling profits, hit by lower call prices and costs from its heavy debt burden, but the 57-per cent slide was lower than expected.

India's mobile market is the world's second-biggest and fastest-growing by customers, but carriers operate under wafer-thin margins. A vicious price war in the crowded 15-player market had sent call prices tumbling in late 2009. No significant price cuts have, however, happened in the past several quarters.

But Reliance Communications, controlled by Anil Ambani, the sixth richest Indian, has lagged rivals in benefitting from the stabilizing market and the bruising debt load is a concern.

Reliance Communications has so far been unsuccessful in its fund-raising plans to cut its debt, which stood at $7.1 billion at end-December. The company is looking to sell a stake in its tower business and is also hunting for a strategic investor to sell up to 26 percent in itself, among other options.

Reliance Communications said on Monday consolidated net profit after adjustment of share of minority interest and associates fell to 480 crore rupees ($105 million) for its fiscal third-quarter ended December from 1108 crore rupees in the year-ago quarter.

Revenue fell to 5004 crore rupees from 5310 crore rupees reported a year earlier. Reliance Communications has more than 125 million mobile customers, or about 17 per cent of the market of 752 million.

A Reuters poll of 12 brokerages had expected the Mumbai-based firm to report a net profit of 3.97 billion rupees on revenue of 52.36 billion.

Reliance Comm executives are among those who authorities are investigating as part of a probe into a telecoms licence row that a government auditor said could have cost the government up to $39 billion in potential revenue.

In a report released in November, the government auditor said Swan Telecom, which was later renamed Etisalat DB, was awarded licences even though a Reliance Comm unit owned more than 10 percent in the firm, a violation of rules.

The auditor also said Swan appeared to have been "acting as a front company" on behalf of the Reliance Communications unit. Reliance Communications has denied any wrongdoing.

Reliance Communications shares, now valued at about $4.4 billion, have lost about a third of their market value this year to be the worst-performing stock among the benchmark index's .BSESN components. The stock fell about 15 per cent last week, and closed 0.3 per cent higher on Monday ahead of the earnings announcement.