RCom – Strong Wireless Capex – Can Ambani Arrest the Fall and Grow ?

Reliance Communications continue to invest heavily in expanding its Wireless Network [mostly in the GSM segment now] Cumulate Wireless investments have almost doubled [~80% YoY] and has now touched Rs 45,000 crore. However, this has not arrested the falling Wireless ARPU which touched an all time low of mere Rs 271 compared to Rs 282 a quarter ago and Rs 361 a year ago. The company has cumulative invstments of Rs 13,000 crore in Global businesses and Rs 5,000 crore in its broadband business.

Here is a brief outlook in Q2-FY09 results,

  • Wireless brings in bulk of the EBITDA – 73% followed by Global Business – 15% and Broadband business – 13%. Other businesess which included Big TV DTH has a negative EBITDA of 1%.
  • RCom has 56 mn wireless customers – 46.8 mn on CDMA platform and 9.2 mn on GSM and 91% of them are in the pre-paid segment
  • Long Distance / Global Business was the most healthy segment this quarter which saw an EBITDA growth of  12% QoQ
  • Broadband business also saw an EBITDA growth of 8% QoQ. RCom has 1.25 mn broadband access lines [0.9 mn Airtel] and an ARPU of Rs 1,668. Th company claims 60% market share of USB Data card wireless Internet access. RCom has also launched Free Laptop giveaway with USB wireless Internet access plans.

The company has been maintaing a PAT around Rs 15,000 mn since the past 2 quarters. It will be interesting to see how the company steers when GSM will be launched this quarter and its strategy to bid for 3G spectrum.