RIL

The performance of Rcom for Q2FY13 was disappointing. Net revenue at Rs.4251 crore was sequentially down 5% and down 1% on YoY. Keeping a tight leash on its operating expenses, the other income component of Rs.171 crore also helped. Its net profit was at Rs.102 crore, down 37% (QoQ) and down 59% on YoY. The good news is that its EBITDA margin at 31.5% is amongst the highest in the industry. RPM stood at healthy 43.2 paisa. The company has stated that it has 4.8 million 3G customers and over 26 million data customers. Its total data usage was at 17,400 TB (MN MB) and data usage per minute was at 232 MB, which the company states is the highest in the industry.

All this is fine but the crux remains that the company has one of the highest debt in India Inc, at Rs.36329 crore. This is 10% of the cumulative over Rs. 3 lakh crore debt of the entire telecom sector. Its interest outgo for current Q2 was at Rs.593 crore, which is 13% of the net revenue. Its interest outgo for H1FY13 was at a gargantuan Rs.1146 crore v/s Rs.669 crore in H1FY12. Interest rates are not expected to come down in Q3 thus that too will bear the brunt. Maybe there could be some relief in Q4 when RBI, in all likelihood might bring down the rates. The company has been trying its level best to bring down debt by selling stake in its mobile tower arm, Reliance Infratel and hopes to list its undersea cable arm in Singapore, Reliance Flag when market conditions improve. Stake sale of Infratel just does not seem to be happening and listing of Rel Flag had to be shelved in July due to weak investor appetite.