Forex provisioning sinks RCom’s profit by 85%

Aug 14, 2010 |

PTI
Reuters

New Delhi, Aug. 13: Reliance Communications (RCom), the country’s number two mobile phone operator, reported a bigger-than-expected fall in June-quarter profit as sharply lower call charges after a vicious price war hit margins.

The firm, controlled by billionaire Anil Ambani, said on Friday net profit fell 85 per cent to Rs 251 crore for its fiscal first-quarter, compared with Rs 1,637 crore reported a year earlier.

The decline was due to high foreign exchange provisioning.

The company’s total income from operations declined to Rs 5,068.50 crore in the first quarter ended June 30, from Rs 5,842.96 crore in the same quarter previous year.

The ADAG company during the quarter had a financial charges of Rs 439.67 crore.

India is the world’s fastest-growing mobile market adding subscribers at a monthly average of 16 million, but stiff competition in a crowded market led to firms cutting call charges to grab subscribers faster than rivals.

RCom’s minutes of usage increased to 95.4 billion in the April-June quarter current fiscal, up 13.3 per cent from 83.3 billion in the same quarter last year.

Customer base of the company rose by 39.2 per cent to 111 million in the June quarter from 80 million in the same quarter last year, the company said in a statement.

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