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RCOM Q1 Net Falls 33%, Idea Net Nearly Doubles

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Mobile carrier Reliance Communications Ltd (RCOM) reported a 33 per cent drop in quarterly profit, weighed down by higher finance costs even as pricing power improved due to reduced competition. Idea Cellular Ltd's quarterly profit, on the other hand, nearly doubled, beating estimates, riding on strong customer additions and greater pricing power after the exit of several smaller competitors from the market.
 
Reliance Communications, the most-leveraged among listed Indian phone carriers, said on Thursday, 1 August consolidated net profit fell to Rs 108 crore from Rs 162 crore a year earlier.
 
That was the fourth consecutive quarter of declining profits at the company, controlled by billionaire Anil Ambani, with profits falling in 14 of the last 16 quarters.
 
Analysts expected the company to report a profit of Rs 287 crore, according to the average estimates of five analysts on Thomson Reuters I/B/E/S.
 
Reliance Communications, like its main rivals, has raised call prices in recent months after competition eased due to the exit of some smaller players, but its debt load has hurt its profitability.
 
The company has sealed two deals to lease its mobile phone towers and fibre optic network to a 4G venture of Reliance Industries Ltd, leading to a 76 per cent surge in Reliance Communications' stock price so far this year.
 
Idea Q1 Net Profit Nearly Doubles, Beats Estimates
Idea, part of the financials-to-minerals Aditya Birla conglomerate, said consolidated net profit rose to Rs 463 crore for its fiscal first quarter to end-June, from Rs 234 crore a year earlier.
 
Analysts had expected the company, which is about a fifth owned by Malaysia's Axiata, to report a net profit of Rs 400 crore, according to Thomson Reuters I/B/E/S.
 
Bigger Indian carriers such as Bharti Airtel Ltd, Vodafone Group Plc's local unit and Idea have raised prices by cutting discounts in the highly-competitive mobile phone market after a court order invalidated the permits of several smaller rivals, forcing them to shut or scale back.
 
Idea, which led the market in new customer additions in the six months to June, has seen its stock rising 61 per cent this year. Idea's results follow strong operating performances by Bharti and Vodafone India.
 
(Agencies)