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Reliance Communications Q3 Profit Falls On Lower Margins

For its fiscal third quarter ended December 31, the company reported a net profit of Rs 171 crore against Rs 201 crore a year earlier

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Reliance Communications Ltd posted a 14.9 per cent drop in quarterly profit on Friday (22 January), as cut-throat competition for customers in a crowded mobile phone market squeezed margins.

India is the world's second-biggest market for mobile phone users behind China, but tough competition has resulted in wafer-thin profit margins for carriers in a market that has one of the cheapest call rates in the world.

Debt-burdened Reliance Communications (RCom), controlled by billionaire CEO Anil Ambani, undertook a series of deals during the December quarter to raise money and expand coverage. These included a spectrum swap with elder brother Mukesh Ambani's Reliance Jio for high-speed 4G services.

RCom, India's fourth-biggest wireless telecommunications carrier, also signed a non-binding pact in December to sell its mobile phone masts business to a group of companies led by buyout firm TPG Capital Management LP.

For its fiscal third quarter ended December 31, the company reported a net profit of Rs 171 crore ($25.29 million) against Rs 201 crore a year earlier. That beat analysts' average forecast of Rs 165 crore.

Third-quarter revenue fell 3.1 per cent year-on-year to Rs 5,298 crore.

In November, RCom agreed to buy Sistema's Indian mobile phone business with a view to getting access to the Russian conglomerate's precious bandwidth that services the high-speed 4G network.


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