Reliance Communications, India’s third-biggest mobile operator, has reported a 33% decline in profits for the three months ending June 2013, to INR1.08 billion ($17.8 million), despite growing revenues by 1%, to INR53.15 billion, over the same period.
The sales improvement comes amid a lessening of competition in India’s mobile market and follows encouraging signals from Bharti Airtel (New Delhi, India), the country’s leading player, and Idea Cellular (Mumbai, India), another rival.
The cancellation of operating licenses by Indian authorities has forced a number of companies out of the market, allowing the remaining players to raise prices and relieve some of the pressure on their margins.
At Reliance Communications (Mumbai, India), average revenue per minute appears to have increased by 4% between the first and second quarters of 2013 thanks to the price increases.
Reliance also managed to sign up nearly three million new customers during the recent quarter, giving it 125.7 million in total.
The operator blamed a profit decline on rising interest payments on its substantial net debt of INR385 billion.
Nevertheless, Reliance insisted that its foreign currency debt was steadily declining every year and that interest outgoing on such debt was fully covered by dollar-denominated earnings from its Reliance Globalcom subsidiary, which provides enterprise and managed services internationally.
The operator is working hard to drive interest in its portfolio of high-speed mobile data offerings and recently began offering 3G connections at 2G prices in an attempt to “trigger a wave of 3G adoption in the country”.
Although Reliance claims to enjoy the highest data usage per subscriber in the industry, just 7.7 million of its 125.7 million customers had taken up 3G services by the end of June 2013.
It has also entered into network-sharing agreements with Reliance Jio Infocomm (Mumbai, India), the rival operator controlled by Mukesh Ambani, brother of Reliance Communications owner Anil Ambani.
Meanwhile, Reliance Communications is using proceeds from a separate fiber deal with Reliance Jio Infocomm to repay some of its “high cost rupee debt”.