Reliance Communications Posts Lower-Than-Expected Q2 Profits

Reliance Communications, India's fourth-biggest mobile carrier, missed second-quarter profit estimates, partly hurt by fewer customers joining its network as compared to rivals.

Telecom carriers in India raised prices after a 2012 court order revoked some licences which had increased competition and depressed prices.

Reliance Communications and its peers have since been able to cut promotional offers and raise voice call rates, but this has also made competition in the sector more aggressive while raising subscriber numbers.

In September, rival Idea Cellular added 1.7 million subscribers, while Reliance added about half a million.

Idea also posted a 59 percent rise in quarterly profit, beating estimates for the second quarter.

Reliance Communications, controlled by billionaire Anil Ambani, said consolidated net profit for the quarter ended September 30 was Rs. 153 crores ($24.8 million), compared with Rs. 675 crores a year earlier.

Analysts on average were expecting the company to make Rs. 215 crores, Thomson Reuters data showed.

Last year, the company took a write-off of about Rs. 400 crores, the company said.

Data usage improved, however.

"Our data subscribers have increased this quarter, and that partly shows in our margin performance," said Gurdeep Singh, chief executive of the company's consumer business.

For the second quarter, the company said data traffic rose 75 percent. Telecom operators make more money when subscribers use data for Internet surfing and other activities, rather than making voice calls.

Sales came in at Rs. 5,090 crores, compared with Rs. 5,266 crores a year earlier.

© Thomson Reuters 2014