Reliance Communication (RCOM) Q1 FY 2011-2012 Result Analysis



RCOM has again disappointed in terms of financial performance for the first quarter of the current fiscal. It has reported a 37% fall in quarterly profit to Rs. 157 crores, its eighth straight quarter of profit drop. Revenue of the company fell by 3.3% to Rs 4,940 crore.


The company is reeling under $7 billion of debts and has been so far unsuccessful in raising funds. An agreement to spin off the tower arm Reliance Infratel into a venture with India's GTL Infrastructure fell apart last year, dealing an unexpected blow to Reliance Comm.

Prospects for Indian mobile carriers have improved after firms including the market leader Bharti Airtel recently increased call prices -- the first such increase in at least two years -- after a vicious price war in the 15-player market had strained their profits.

Reliance Comm -- which had aggressively cut prices and gave away free call minutes to lure customers when the price war began in the second half of 2009 -- has also increased prices in a phased manner in most of its telecom zones.

Shares in Reliance Comm, valued at about $3.8 billion, have lost about 42% this year, compared with an 18% fall in the main index. By comparison, Bharti shares are up more than 8% this year, while those in No.4 cellular carrier Idea Cellular have gained more than a third.



No comments:

Post a Comment

Do you like my blog?

If you enjoy reading InvestorZclub blog, please help spread the word by sharing this site with your friends.