Reliance Communications Profit Climbs On User Gains

[Arun 795]

April 30, 2008

Bloomberg

Reliance Communications Ltd., India's second-largest mobile-phone operator, reported fourth- quarter profit rose 47 percent, beating estimates, after it signed up a record number of users.

Net profit climbed to 15 billion rupees ($317 million) in the three months ended March 31, the Mumbai-based company said. Seven analysts in a Bloomberg survey estimated profit of 13.8 billion rupees. Sales gained 35 percent to 53 billion rupees.

Billionaire Chairman Anil Ambani will spend as much as $6.5 billion to increase coverage and build a second network to challenge Bharti Airtel Ltd. India added a record 10.2 million subscribers in March to surpass the U.S. as the world's largest mobile-phone market after China.

``It's a play on Indian consumption, in the perspective of a weak external environment,'' said Gunnar Palsson, a fund manager at Hagstromer & Qviberg Fond in Sweden, who owns Reliance Communications as part of the $475 million he manages. ``It was positive that they got a GSM license. Now Reliance maybe has a chance to catch up.''

Reliance runs a nationwide network based on code division multiple access or CDMA technology and in October won the government's permission to expand a network based on the global system for mobile communications or GSM countrywide. That network will be complete by mid 2009, Ambani told reporters today.

Anil Ambani said that Reliance Communications has already placed orders worth USD one billion for GSM electronic equipment, and is in execution mode as of now.

He expects GSM services to be launched in the next 12-18 months. Anil Ambani added that he was awaiting SEBI approval for RITL and for better market conditions for unlocking more value in Reliance Telecom Infrastructure Limited (RTIL).

Ambani said that the company followed a conservative policy on forex. He also said that the cost effeciencies will ensure that the margins remain near upper band in industry. He added that he would look at a separate listing for Reliance Globalcomm in the course of this finanicial year

Stock Gains

Shares rose 0.5 percent to 577.85 rupees at close of trading on the Bombay Stock Exchange. The stock has gained 21 percent in the 12 months to March 31 compared with the benchmark Sensitive Index's 20 percent advance.

Bharti on April 25 reported profit rose 37 percent to 18.5 billion rupees, beating estimates and giving its stock the biggest gain in more than four years.

ARPU or the average revenue per user generated by each wireless subscriber narrowed to 317 rupees a month, from 339 rupees a year earlier, Reliance Communications said today. The average minutes of use per subscriber in a month dropped to 430 from 449 a year earlier.

Reliance Communications may also list its Globalcom division on the London Stock Exchange this fiscal year, Ambani said. The division includes the operator's submarine cable business, FLAG Telecom Group Ltd. and Yipes Holdings Inc., an Ethernet-service provider.

The company plans to list global subsidiary, Reliance GlobalComm, “if values and markets are right on the London Stock Exchange, said Anil Ambani, Chairman, RCom, while addressing the media.

RCom’s tower business subsidiary, Reliance Infratel, has filed its prospectus with the Securities and Exchange Board of India. “We are awaiting better market conditions. There have been positive developments such as allowing of active and passive sharing, issuing of new licences and spectrum allocation. The regulator’s recommendations on 3G and WiMax are attractive opportunities for Reliance Infratel.”

RCom at present operates GSM services through Reliance Telecom in eight circles and according to Mr. Ambani, “the numbers are encouraging and we have garnered a much higher market share than expected. We are adding four lakh customers a month.” For its remaining 15 circles, the company has placed electronics orders worth over $1 billion. The pan-India GSM roll-out will start at the end of this year and RCom will achieve coverage to all villages by end-2009.

The company has ventured into the information technology (IT) sector by creating Reliance Technology Services which will focus on specific verticals of telecommunications, financial services, media and entertainment and utilities. It will initially service group companies and later serve external companies.

The company is now testing its Direct to Home (DTH) product, Big TV, nationally. This service incorporates MPEG4 (Moving Picture Experts Group) and HDTV technologies and will be launched commercially soon.

Raising Money

Ambani is also raising money by selling a stake in Reliance Infratel Ltd. that owns the operator's telecommunications towers in the country. He agreed in July to sell a 5 percent stake for about $338 million to seven investors. The sale values that division at about $9 billion, Reliance said.

An initial public share sale for the unit is ``awaiting favorable environment,'' Ambani said. Reliance Communications will hold 85 percent of the tower unit after the sale, he said.

India aims to have more than 500 million phone connections by 2010, requiring an additional investment of $25 billion and revenue of 2.1 trillion rupees, the federal telecommunications ministry said in a statement on its Web site in January.

4Q FY08 Quarterly Report

[Honest 836]

^^^

My dear friends, it feels really good to hear such kind of news that Reliance's profit is rising now a days. It will be better for the company as well as for their clients also.

Hope to see Reliance on top of every opertor.

Regards.