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Tata Tele says focus on cost cuts on way to profits

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CIOL Bureau
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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.

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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.

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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.

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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.

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