Reliance Buoyed by Q4 Profits

Indian telecom group Reliance Communications Ventures (RCoVL) saw its net profits rise 30 percent sequentially during the fourth quarter along with record growth in wireless subscriber numbers. (See Reliance Posts Earnings.)

The company reported net income of 4.03 billion rupees (US$89.73 million) on revenues of INR29.7 billion ($661.28 million). Profit before extraordinary items rose 42 percent to INR4.40 billion ($97.97 million).

Revenues were down from INR33.27 billion ($748.68 million) the previous quarter, although Reliance notes that revenues from its new, lifetime, free, incoming plans have been deferred over a period of 46 to 65 months. The boost in profits largely came in cost savings -- at INR19.28 billion ($429.27 million), costs fell to 64.9 percent of revenues, compared with 71.6 percent in the previous quarter.

Last week, rival Bharti Tele-Ventures Ltd. reported a 12 percent quarter-on-quarter increase in revenues to INR34.11 billion ($759.47 million) for a net profit of INR6.82 billion ($151.40 million).

Reliance added 3.2 million wireless customers during the quarter, bringing its total customer base to more than 20 million. It signed up 1.5 million in March alone, the largest-ever monthly addition by an Indian service provider. Wireless accounted for 71 percent of revenues.

Reliance is now making a push into broadband, with plans to expand its network from 40 cities to 200 over the next few quarters. It has traditionally focused on business broadband, but intends to broaden its focus to include consumer services. Its broadband segment saw the highest percentage revenue growth among its three operating divisions during the fourth quarter -- up 54 percent sequentially.

EBITDA margins rose in all three segments -- wireless, broadband, and long distance (via its FLAG Telecom Ltd. subsidiary), increasing overall from 28 percent to 35 percent.

Reliance, which was publicly listed at the beginning of March, is set to replace Tata Power on the Bombay Stock Exchange, effective June 12, 2006.

Created last year as a result of a "demerger" from Indian conglomerate Reliance Industries, the Reliance group consists of Reliance Infocomm (RIC), Reliance Communications Infrastructure (RCIL), Reliance Telecom (RTL), and FLAG Telecom. For that reason, comparable figures are not available for the year-ago quarter.

In a prepared statement, the company said it plans to reorganize the group so that Reliance Infocomm will be merged with RCoVL and the remaining companies will operate as subsidiaries.

— Nicole Willing, Reporter, Light Reading

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