Doubts Raised Over Reliance Communications' Disclosure

[Honest 836]

Doubts raised over Reliance Communications' disclosure

24 Jul, 2008, 0019 hrs IST, ET Bureau

MUMBAI: Raising questions about Reliance Communications’ (RCOM) compliance with disclosure norms, a report by a brokerage house has said that the company’s revenues, as reported to telecom regulator Telecom Regulatory Authority of India (TRAI), are significantly lower than those filed with bourses.

While RCOM reported gross wireless revenues of Rs 416 crore in the March 2008 quarter, it told TRAI that its net wireless revenues were Rs 318 crore, a difference of 38.9%, according to the report by Kotak Institutional Equities Research. To top this, the revenues disclosed to TRAI are unified access service licence (UASL) revenues, which include earnings from fixed line as well. “The difference between the gross revenues reported to investors and TRAI would be even larger if we were to include the fixed line revenues in the revenues reported to shareholders,” said the report.

Further, the gap between reported wireless revenues to investors has increased significantly in the past six quarters. “Reported gross revenues were 4.4% higher than TRAI-reported numbers in the December 2006 quarter, which have gone up to 25.5% in the March 2008 quarter.”

Gross wireless revenues, the Kotak report said, had grown to Rs 416 crore in the March quarter this year, from Rs 337 crore in June 2007, an absolute increase of Rs 79 crore. However, in the report to TRAI, RCOM showed the increase during the period from Rs 314 crore to Rs 331 crore, a net rise of Rs 17 crore. “For other service providers such as Bharti and Idea, absolute revenues and growth were consistent between those reported to TRAI and the shareholders,” it said.

However, an RCOM spokesperson declined to comment. While licence fees and spectrum charges reported to TRAI by other operators have had a meaningful increase, consistent with annual gross revenues, for RCOM, the charges have remained largely unchanged for the past three quarters. The RCOM management attributes the difference to increasing proportion of wireless revenues from rural households, direct exchange lines, data cards and R-World & RCOM’s value added services platform.

On revenues from DELs, the Kotak report said: “We agree with the RCOM management on this aspect. The DoT does provide capex and opex subsidy. This can potentially explain a revenue gap of 4.3% between the revenues disclosed to investors and TRAI,” it said. “RCOM’s explanation partly addresses the reasons for the revenue gap reported to TRAI,” the report added.

RCOM also said that it does not include revenues from its R-World platform and the data card business as part of the revenues reported to TRAI. “However, we note that other operators include revenues from these services as part of gross revenues and AGR; operators have to pay licence fees on all telecom-related revenues,” the report said.

Further, the absolute increase in network operating costs for RCOM is lower than even Idea Cellular despite RCOM increasing population coverage for its CDMA and eight GSM circles to 90% over the past one year. Bharti’s population coverage increased to just 71% in FY08 against 58% in FY07.

For FY08, RCOM’s absolute increase in interconnection costs is also lower than Idea Cellular, and significantly, lower than Bharti Airtel. The RCOM management has cited an increase in on-net calls and investments in points-of-interconnection as the prime reason, said the report.

[vmsanghrajka 0]

As usual.. Reliance is know for these manuplation and misappropriation of funds.. Lol.. Caught on wrong foot..

[prathod 3]

I am just wondering what will be rcom's next year revenue after the change in tarrif of wap browsing

[rajat8676 0]

Looks like the Ambanis cannot do anything straight forward. Its in their habit to dupe whoever they deal with