World VoIP NewsNet profit tumble as tariff war rages onNet profit tumble as tariff war rages on

Net profit tumble as tariff war rages on

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India’s second largest mobile network operator by subscribers, Reliance Communications (RCOM), has released its financial results for the three- and twelve- month periods ended 31 March 2010, posting a quarterly drop in net profit as the effects of a tariff war spurred by hyper-competition took their toll.
For the company’s last quarter of FY2009/10 it generated a net profit of INR12.195 billion (USD267.1 million), down 16.1% from the INR14.544 it reported in the same period a year earlier. Annual net profit also fell, down 11.9% year-on-year at INR46.55 billion. As call prices have fallen for consumers, so has the revenue generated by RCOM, and in the three months to end-March 2010 it had a turnover of INR50.928 billion, a 16.8% drop against the INR61.237 billion in the corresponding period in 2009. Full-year revenue meanwhile was down 3.6% y-o-y at INR221.323 billion. As expected, the impact of competition in the country’s wireless sector saw average revenue per user (ARPU) display a similar downward trend, standing at INR139 for 4Q 2009/10, down from INR224. Quarterly earnings before interest, tax, depreciation and amortisation (EBIDTA) for the telco was INR16.02 billion, plunging 32.8% against 4Q 2008/09, with annual EBITDA for the 2009/10 year down 15.9% compared with the previous twelve-month period, at INR78.205.

While economic indicators have faltered, RCOM has continued to expand its customer base, and at end-March 2010 the telco had 102.42 million wireless customers, having added more than eight million in the first three months of 2010.

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