August 14, 2015 / 1:56 PM / 4 years ago

Reliance Communications profit capped by regulatory changes

MUMBAI (Reuters) - Reliance Communications Ltd (RLCM.NS), India’s fourth-biggest mobile phone carrier, announced a 34 percent rise in quarterly profit on Friday, but missed analyst expectations as regulatory changes hit its core voice business.

A customer leaves a Reliance communication store in Ahmedabad January 23, 2013. REUTERS/Amit Dave/Files

The company’s domestic telecoms business was hurt by the regulator’s decision to reduce inter-network call charges and cap roaming tariffs, Gurdeep Singh, chief executive of Reliance Communication’s consumer business, told Reuters by telephone.

Consolidated revenue in the first quarter ended June 30 was almost unchanged from a year earlier at 55.4 billion rupees ($852.53 million).

The company, controlled by billionaire Anil Ambani, said its total net profit rose to 1.77 billion rupees for the quarter. That was well short of average analyst estimates of 2.69 billion rupees, according to Thomson Reuters data.

However, the company continued to see strong growth in its data business as more subscribers used smartphones to access the Internet and existing customers used more data.

The proliferation of cheap smartphones, led by Chinese brands, has prompted more Indians to use their handsets to access the Internet and demand faster downloads. An Internet-based startup boom in the country has also seen increased adaptability on smartphones, bolstering demand for high-speed data.

“Our single-minded objective is to get more than a fair share of smartphones, dongles and wifi devices on the network,” Singh told Reuters.

Reliance Communications said its total data customer base grew 24 percent to 35.4 million in the first quarter. Data traffic was up 68 percent at 92.8 billion megabytes.

The company’s net debt rose to 386 billion rupees at the end of June from 367.3 billion as of March 31, primarily due to an initial payment for telecoms airwaves won in a government auction in March.

Reliance Communications, the most leveraged Indian telecoms carrier with a net debt-to-EBITDA ratio of almost five times, has revived a plan to sell a stake in its tower unit and is also considering divesting other non-core assets in a bid to cut debt.

Singh said the company was focused on its deleveraging target to bring the net debt-to-EBITDA ratio down to around 3.5 by March 2017.

($1 = 64.9829 rupees)

Reporting by Aman Shah in Mumbai; Editing by Susan Fenton

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