RIL

The performance of Rcom for Q3FY13, like in Q2FY13 was disappointing YoY but marginally better sequentially. Its consolidated net revenue came in at Rs.4797 crore, up 1.5% YoY but a hefty ‘other operating income’ at Rs.5136 crore made the picture a bit better. Yet, after the hefty interest outgo at Rs.605 crore and marginally higher operating costs, the company posted a net profit at Rs.105 crore, down 43% YoY and up 3% on QoQ. Its EBITDA margin is at 31.2% v/s 31.5% (QoQ), which is amongst the highest in the industry. RPM stood at healthy 44 paisa v/s 43.2 paisa in Q2FY13. The company has stated that it has 6.1 million v/s 4.8 million (QoQ) 3G customers and 27.6 million v/s 26 million (QoQ) data customers. Its total data usage was at 22,512 TB v/s 17,400 TB (MN MB) on QoQ and data usage per minute was at 280 MB v/s 232 MB (QoQ), 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 9MFy13 was at Rs.1752 crore, which is 12% of the net revenue. Interest rates are expected to come down soon and hopefully, that will ease some of the pressure. 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. Voice call rates have started going up, with Airtel and Idea having announced increase in some rates. Rcom might also follow suit and that will help bolster its revenue in coming months.