Reliance Communications Limited (RCom) on Monday announced a net profit of Rs.480 crore for the third quarter of 2010-11. Revenue stood at Rs.5,004 crore and operating profit at Rs.1,668 crore. Operating margins went up to 33.3 per cent which is the highest in the industry.
According to Satish Seth, Group Managing director, “Revenues are down this quarter as a result of rebalancing of our product portfolio. We are doing away with low margin business even if it provides high volume as it puts pressure on our resources, including scarce resources like spectrum. We are deliberately moving away from the wholesale segment of PCO and FWP business. The wholesale segment of PCO business is typically a low margin segment where wholesale minutes are provided to the distributors at a bulk discount. We are putting our resources on more profitable data and VAS businesses thereby future proofing the business against voice-led growth alone. We have been able to achieve these EBITDA (earnings before interest, tax, depreciation and amortisation) margins as a result of our constant endeavour to improve the efficiency of operations.”
During the quarter, the company launched Reliance 3G services starting with Delhi, Mumbai, Kolkata and Chandigarh. It will be launching 3G services across all 13 telecom circles, where it holds 3G licences, by the end of the current fiscal year and is targeting a national footprint of Reliance 3G services through associations with other like minded, quality 3G licensees in the balance nine telecom circles during the course of next year.
In wireless business, quarterly revenue was at Rs.4,064 crore, a sequential decrease of 2.3 per cent, and an operating profit of Rs.1,179 crore. The operating profit margin was 29 per cent and revenue per minute (RPM) stood at 44 paise. In non-wireless business, the company has created a new business unit, Global Enterprise Business, which consists of erstwhile Globalcom business and Enterprise Broadband Business. Both the businesses offered similar type of products and services and served similar clients in different geographies. The Global Enterprise Business is led by Punit Garg and is further divided into two vertical SBUs namely Carrier & ISP business and Enterprise business, each led by respective SBU heads.
On the overall RCom's capital expenditure front, Mr. Seth said the earlier guidance (excluding 3G) for 2010-11 remained at Rs.3,000 crore.
