Reliance Communications goes GaGa about Data + 2G Voice Still Weakening

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In: Mobile, Telecom

Reliance Communications announced its June-12 Results and here are the most important things to have a glance at.

  1. Reliance Communications management headed by Mr. Anil Ambani doesn’t value corporate governance [report different set of numbers to TRAI, manipulate accounts, etc etc] and thus everything that is reported by the team is questionable, let me state this disclaimer first and then present what the management had to report and say.
  2. Lets start with my favorite – Data / Broadband. It claims to have 24 Mn Data Subscribers. 4 Mn Active 3G Customers consuming a whopping 240 MB / Month [~Double that of Airtel 3G]. Remaining 20 Mn Data Consumers must be on the EVDO – Reliance NetConnect Broadband platform. RCom estimates the total data revenue market at Rs 70oo Cr currently and believes it has
    20% share. RCom’s Data business contributes 20.2% of its total wireless revenues.
  3. 2G Voice GSM + CDMA – RCom’s rev/min declined by 1.5%qoq. This compares favorably with peers ( Airtel -2.6%, Idea: -2.4% and Vodafone: -1.5%). However, traffic growth was lower at 2% ( Airtel  3.8%, Idea: 5.3%, Vodafone: 4.2%). Higher on-net calls – Means subsidized minutes.
  4. 2G Voice strategy – The management has classified circles of operations as 900 MHz circles, metro & metro-like circles and emerging circles (other 1800 MHz circles). Offerings will be geared towards increasing usage and ‘optimizing costs’ in each of these segments, without denying the possibility of further tariff cuts to gain market share.
  5. CAPEX & Spectrum Auction – RCom maintains CAPEX guidance of Rs15bn for FY13 (Q 1 @ Rs3.7bn or 25% of full-year guidance) and stated it does not expect any meaningful investments on spectrum acquisition until it’s due for renewal in 2015.
  6. Global Enterprise segment performance was lackluster. Logically, the segment must have benefited from the sharp decline in INR over the quarter, but poor reporting standard lets us conclude that underlying trends are probably weaker than what the headline numbers indicate.
  7. RCom failed to list Flag Telecom in Singapore last quarter and Veritas Equity Research takes credit for painting the poor corporate governance in RCom in Black & White, thus shaking international investor confidence in the company. Well, Veritas must know that Anil Ambani can go to the extent of  laundering his own money and subscribe to the issue, but guess is now scared after the UK Ruling and may have decided to backoff from making such a move.

 

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