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Profits shrink: Telecom players report third-quarter results

February 15, 2011
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Telecom comapnies’ financial results for the third quarter of fiscal year 2010-11 revealed a not-so-bright picture, with profits shrinking for most players. Idea Cellular was among the few to have done well, witnessing a significant increase in net profits. Bharti airtel, Reliance Communications (RCOM) and GTL Limited, however, reported a drop in their third quarter net profits. Companies such as Mahanagar Telephone Nigam Limited (MTNL), Tata Teleservices (Maharashtra) Limited (TTML), Tata Communications and GTL Infrastructure posted losses for the quarter ended December 2010.

Bharti airtel

Bharti airtel reported a 41 per cent drop in its third-quarter net profits over the previous year. Profits declined from Rs 21.95 billion for the quarter ended December 2009 to Rs 13.03 billion for the quarter ended December 2010.

This decline may be attributed to unexpected currency fluctuations and to an increase in the spectrum fee. Currency fluctuations accounted for a loss of Rs 15.1 billion. The company’s profit margins fell on account of its global rebranding exercise, which cost it Rs 3.4 billion. During the December 2010 quarter, the company’s EBITDA (earnings before interest, taxes, depreciation and amortisation) stood at Rs 49.81 billion, with the EBITDA margin at 31.6 per cent.

Bharti’s consolidated revenues grew 53 per cent from Rs 103.05 billion in the quarter ended December 2009 to Rs 157.56 billion during the corresponding period in 2010. The company also repaid $415 million to fulfil its debt obligations. A major portion of this amount has been used to repay the funds that were borrowed for the 3G and broadband wireless access spectrum auctions.

Bharti’s average revenue per user (ARPU) for its Indian operations was Rs 198 per month as of December 2010 while that for its African operations stood at $7.3 per month in the same period.

RCOM

RCOM has reported a 56.6 per cent decline in its net profits, from Rs 11.08 billion for the quarter ended December 2009 to Rs 4.8 billion for the corresponding quarter in 2010. The company’s revenues fell 6 per cent from Rs 53.09 billion for the December 2009 quarter to Rs 50.04 billion in the quarter under review. Going forward, the company plans to re-balance its portfolio and exit from low-margin businesses in both the wireless and wireline segments. It has already been reducing free minutes in its wireless business and now intends to move away from the wholesale public call office business.

The company’s subscriber base, however, went up by 34 per cent to 126 million in the quarter under review, from 94 million in the corresponding quarter in 2009. RCOM, which has launched 3G services in Mumbai, Kolkata and Chandigarh, plans to launch services in all the 13 circles where it won 3G spectrum, by end-March 2011.

Idea Cellular

Idea Cellular announced its unaudited results for the quarter ended December 2010. The operator posted a consolidated net profit of Rs 2.43 billion, up 43 per cent from Rs 1.7 billion for the corresponding quarter in 2009. The company’s total income stood at Rs 39.55 billion for the December 2010 quarter as compared to Rs 31.49 billion for the corresponding quarter in 2009. On a quarter-on-quarter basis, Idea’s revenue grew by over 8 per cent.

During the December 2010 quarter, the company’s EBITDA margin remained almost flat at 24 per cent (with the EBITDA at 24 per cent and 24.3 per cent for the first and second quarters of 2010-11 respectively).

The company’s margins from new circles improved as compared to established circles. Healthy margins of 45.8 per cent from Indus also contributed to the overall margins.

The company’s net subscriber growth for the December 2010 quarter stood at 10.2 per cent quarter-on-quarter, taking its overall subscriber base to 81.8 million.

MTNL

The state-owned operator reported a 4.04 per cent increase in revenues from Rs 9.14 billion in the December 2009 quarter to Rs 9.51 billion during the quarter under review. However, the company recorded a net loss of Rs 6.71 billion for the December 2010 quarter as compared to a loss of Rs 9.19 billion for the corresponding quarter in 2009. The loss can be attributed to one-time charges on account of 3G spectrum and broadband wireless access liability of Rs 110.97 billion, for which Rs 1.57 billion has been amortised for the quarter ended December 2010.

TTML

TTML reported losses of Rs 795.8 million for the quarter ended December 2010, down 21.02 per cent from a loss of Rs 1 billion reported during the corresponding quarter in the previous year. The company’s revenues declined by 1.71 per cent from Rs 5.94 billion for the quarter ended December 2009 to Rs 5.84 billion for the December 2010 quarter.

The company has reported a 15 per cent growth in EBITDA on a year-on-year basis. TTML’s subscriber base reached 16.2 million during the quarter ended December 2010, registering a year-on-year growth of 41 per cent.

Tata Communications

Tata Communications reported a consolidated loss of Rs 1.97 billion for the December 2010 quarter as compared to a net profit of Rs 301.8 million during the corresponding period in 2009.

In the past, the company has invested millions of dollars to build and maintain undersea cables and network infrastructure. However, the global over-capacity in this segment has led to a decline in bandwidth prices, which has resulted in significant losses for companies like Tata Communications.

Tata Communications’ consolidated revenues during the quarter under review stood at Rs 30.18 billion, up 8.95 per cent from the Rs 27.7 billion registered in the quarter ended December 2009. Global voice solutions contributed Rs 16.23 billion to revenues, while the global data and managed services vertical accounted for a Rs 11.87 billion share in revenues for the December 2010 quarter.

Network costs rose 9.5 per cent from Rs 16.62 billion for the quarter ended December 2009 to Rs 18.2 billion for the December 2010 quarter

GTL Limited

GTL Limited has announced the unaudited results of the company (including its international subsidiaries on a consolidated basis) for the quarter under review. The company witnessed a 57 per cent growth in revenues during this quarter, with its consolidated revenues from global operations at Rs 8.81 billion as compared to Rs 5.61 billion during the corresponding quarter in 2009.

However, the company’s net profit decreased 16.67 per cent from Rs 588.03 million for the December 2009 quarter to Rs 490.48 million in the corresponding quarter of 2010.

GTL Limited’s administration expenses reduced from Rs 391 million for the December 2009 quarter to Rs 388.2 million during the quarter under review. As a result, its EBITDA improved from Rs 876.2 million during the December 2009 quarter to Rs 1.41 billion during the corresponding period in 2010, registering a  growth of 62 per cent.

GTL Infrastructure

Telecom infrastructure provider GTL Infrastructure Limited registered a net loss in the quarter ended December 2010 on account of higher expenses and a foreign exchange loss. The company posted a net loss of Rs 619.94 million in the quarter ended December 2010 as compared to a net profit of Rs 230.51 million for the corresponding period in 2009.

The company’s revenues increased 34.3 per cent from Rs 915.6 million in the December 2009 quarter to Rs 1.23 billion during the corresponding period in 2009. Interest costs more than doubled to Rs 689.3 million for the quarter under review as compared to Rs 273.1 million at the end of December 2009.

The company also incurred a foreign exchange loss of Rs 128.87 million for the quarter ended December 2009 as compared to a foreign exchange gain of Rs 258.71 million a year earlier. GTL Infrastructure added 1,218 telecom towers during the quarter, taking its total number of towers to 32,463.

 
 
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