Reliance Communications – Lackluster Q3 – ARPUs Down 8% QoQ

Reliance Communications announced its Q3 FY09 results this evening had lackluster numbers to report.

Lets review the performance of Reliance Broadband and then run through the results. At the beginning of 2008, Reliance had wired up 787K building and providing 1 mn broadband access lines. At the end of 2008, the number is a dismal 892K buildings and 1.33 mn broadband access lines. Reliance Broadband has registered below average industry growth in 2008 – mere 33%. [74.12% as per TRAI, this means BSNL / MTNL have done an excellent job in 2008] Avg Revenue per Line has been stable at Rs 1,681.

Wireless Business continues to fill the company’s coffers despite the aggressive CAPEX in launching the Reliance GSM. ARPUs are down 8% QoQ to Rs 251 [Airtel has Rs 324]  – Seriously Alarming and MOU is also down to 410 [Airtel reported 505]. Reliance will launch range of CDMA services in the next few weeks. CDMA churn rate is down to 1% indicating customer loyalty. 60% share of data card internet access market in India. There has been lot of updates on the Reliance GSM Mobile and we will write about it separately.

Reliance Globalcom has witnessed significant demand in the B2B bandwidth for Voice and Data. It boasts of customers like Vodafone, Idea Cellular, Spice, Tata Indicom and Shyam Tele to name a few. In the international arena, this segment has done well cutting deals with various Retail Chains and vendors to link their facilities across the World. One of them is an Italian chain with over 50,000 PoS systems linked processing over 6 mn transactions a day. Reliance Globalcall has 2 mn customers and is the market leader in NRI’s Calling Home country segment 🙂

Reliance Enterprise Services did witness some slowdown due the economy but the company is laving no stone unturned to encash on this. Reliance with its bouquet of offerings is finding it easier to win new customers. It has added Vishal Retail and Shoppers’ Stop to its clientele. It now plans to build a new data center in Delhi after the completion of one in Hyderabad.

Reliance Big TV managed to get 1 mn customers within 90 days of launch, which is a World Record. RCom also hopes to expand its Non-Voice Revenues from current 7% to 15-20% over the next couple of years.

Highlights from RCom Conference Call:

  • No Revenue Guidance but margins are expected to be stable in future.
  • To a question on discrepancies in reporting of numbers, the management is of the view that it was a campaign by rivals and it has handed over all the details requested by TRAI.
  • CAPEX of Rs 15,000 crore for FY10. FY09 CAPEX revised downwards to Rs 25,000 crore from Rs 30,000 crore. [We feel RCom will be unable to meet even Rs 25,000 Cr target and may end the year with Rs 21,000 cr]
  • RCom’s Optical fiber to inch closer to 200K Kms from the current 175K.
  • Reliance to launch IPTV in association with Microsoft
  • A question regarding the transfer of stake of Reliance Tower and Infrastructure Ltd and Reliance Globalcomm to a Reliance group company and back created some confusion as there was no clear answer. Hopefully management will come clean on this.

Stay tuned for more updates on Reliance GSM Mobile launch and its business model to lure customers 🙂