Tata Tele says focus on cost cuts on way to profits

MUMBAI - High depreciation and a one-time write-off drove Tata Teleservices (Maharashtra)
Ltd. to report a 1.52-billion-rupee quarterly net loss, but the company said its
tight leash on costs was improving the balance sheet.

The company on Thursday reported its first-ever cash profit, or earnings
after interest but before depreciation and taxes, at 260 million rupees for the
quarter ended March, as it cut interconnect and marketing expenses.

"We are bringing our costs down since we want to be profitable on a net
basis very soon," S. Venkatesan, vice president for finance, said.
"Our main challenge is on the depreciation front."

During the quarter, the telecom service provider re-estimated the value of
its network equipment factoring in technology obsolescence and took a
depreciation charge of 1.3 billion rupees, up 13 per cent on year.

Tata also wrote off 472.5 million rupees toward flood damages to its network.

As a result, the company reported a net loss of 1.52 billion rupees as
against 1.78 billion rupees a year ago. Revenue rose 42 per cent to 3.08 billion
rupees.

Meanwhile, the company aimed to increase its subscriber base to 3 million in
the year to March 2007, up from 1.84 million now, Managing Director, Charles
Antony told reporters.

The rural market would offer maximum growth potential. "We are expanding
into rural Maharashtra, which is a low teledensity market," Antony said.

The company would spend 5.9 billion rupees to add capacity, expand its reach
and offer business services.

Shares of Tata Tele closed down 7 per cent at 23.15 rupees on the BSE, which
crashed 6.8 per cent.