Tring tring tring, not a good news: RCom profit declines by 15 per cent

Reliance Communications (RCom) India’s fourth largest telecom service provider announced its Q3FY16 results on last Friday after market hours. RCom met street expectations on profit front as anticipated by most of the analysts. However, performance on a sequential basis was much better as the company was able to successfully increase ARPU (average revenue per user) to Rs 142 Q-O-Q (quarter on quarter) better than its peers.

RCom’s third quarter revenue decreased marginally by 1 per cent sequentially to Rs 5277 crore compared to Rs 5324 crore achieved in last quarter of the same fiscal year on the back of loss of revenue from customers in the 5 circles where the 2G license period expired. On an operational front EBITDA increased by 2 per cent to Rs 1782 crore Q-O-Q (quarter on quarter) compared to Rs 1751 crore in the September quarter. Company saw its other expenses reduce by 3 per cent Q-O-Q to Rs 3206 crore from Rs 3301 crore therefore aiding margins. Company's margins rose up by 100 basis points Q-O-Q to 34 per cent from 33 per cent in Q2FY16. Profits after tax increased by 9.62 per cent to Rs 171 crore compared to Rs 156 crore realized in the preceding quarter of FY16.

On a yearly basis, revenue shrank by 3 per cent due to loss of revenue on account of the expiry of 2G license in 5 circles. EBITDA dropped by 2 per cent Y-O-Y (year on year). Whereas, margins saw an increase of 34 basis points Y-O-Y to 34 per cent. PAT weakened by 15 per cent yearly.

On a segment wise performance revenue from Indian operations declined slightly by 1 per cent Q-O-Q to Rs 4651 crore compared to Rs 4701 crore in Q2FY16. However, revenues from global operations augmented by 4.1 per cent Q-O-Q to Rs 1106 crore from Rs 1062 crore attained in the previous quarter.

RPM (revenue per minute) for the quarter in review improved by 0.9 per cent to 45.2 paisa Q-O-Q. Indicating better voice realization. ARPU increased by 2.9 per cent Q-O-Q to Rs 142. ARPU growth was better than competitors like Idea on account of successful migration of customers to RCom’s 3G network in service areas where license expired.

Data business continued its uptrend as total data traffic on its network increased by 6 per cent Q-O-Q and 35 per cent Y-O-Y due to increase in data subscribers and higher data usage per customer. Data usage per subscriber increased by 1.2 per cent Q-O-Q to 905 MB. The total data customer base has seen a growth of 4.3 per cent Q-O-Q to 38.8 million including additions of 23.1 million 3G customers in Q3.

Reacting to its muted set of Q3 results, RCom’s scrip opened flat with a positive bias. Other telecom stocks like Idea Cellular and Bharti Airtel too were trading flat on BSE after hitting fresh lows on Friday’s trading session.