Tata Teleservices (Maharashtra): Disappointing Performance In FY13

Tata Teleservices (Maharashtra) (TTML) announced its FY13 results on May 13, 2013 post market, and they were not up to the mark. The company's share price opened almost flat from the previous closing price.

Revenue from its operations grew by a mere 6% to Rs 2608 crore on a YoY basis. This is primarily due to an increase in subscribers for the company in this period. While the other operating income increased by 45% to Rs 26 crore. 

However, due to a huge increase in network operating cost (by 19%) and provisions for contingencies (by 619%), TTML's operating expenses increased by 11% to Rs 2502 crore. The other expenses such as interconnection cost, administration cost and fees paid for taking license has also largely increased, which lead to an increase in the overall expenses. The company's long-term borrowings have also increased by 6% to Rs 4897 crore in FY13.      

The higher operating expense has drastically affected the company income. TTML showed a loss of Rs 100 crore in FY13, which stood at a profit of Rs 5.43 crore in FY12. If we exclude the other income from this, TTML's operating loss will come to Rs 145 crore in FY13 on a YoY basis which is not good for the company. The other income increased by 168% to Rs 51 crore. Contrary to this, the EBITDA in Q4FY13 stood at Rs 162 crore.

Further, the company has paid a large interest cost in this period. It stood at Rs 564 crore by showing a growth of 8%. This has again hindered the bottomline of TTML. 

The company is more focused on its wireless broadband services. It has also announced additional plans for its new launch 'Always Plus' in the last quarter FY13.  

TTML has posted huge loss in the fiscal year 2013, continued with the loss posted in FY12. Also, it has a large operating expense, which is increasing consistently. We therefore recommend investors to stay away from the scrip.