Reliance Communications Wireless Operations were Patchy. Minutes growth of only 3.7%qoq (lowest among peers) and mobile revenue growth of 2%qoq surprised negatively as free minutes on GSM were expected to show up more. Termination cost on free mins (net revenues down 2%qoq) and higher nenetwork opex led to flat mobile EBITDA sequentially; margins, however, were in-line and relatively steady at 36.9%, as SG&A (no additional costs for GSM) and employee costs were stable.

FY09 capex came in at Rs194bn (vs. Rs250bn) and FY10E guidance was lowered to Rs100bn (vs.Rs150bn). As a result, FY10E net debt stands reduced to Rs343 bn (3x EBITDA) from Rs415bn; strategy seems to be to sweat the existing assets and conserve for 3G.

  • Wireless Revenues – QoQ decline from higher access and interconnect charges
  • ARPU + MoU reach new low of Rs 224 and 372. Lackluster usage trend despite offer of
    free mins, management confident of a pickup in 1QFY10
  • Revenue per Minute of Rs 0.60 is stable and surprising.
  • NLD – 9 bn minutes higher than Industry peers.
  • Broadband revenue growth continues with launch of Reliance Netconnect + 3G Wireless Services
  • ARPU of Broadband Subscriber increases to Rs 1,735 connecting 929,600 buildings
  • Reliance Communication GSM Net adds Slowdown in March.

The battle for Wireless supremacy in India has entered a stage of bloodbath as new operators bleed while incumbents struggle to survive with positive cash flow they have enjoyed by diversifying into other areas of Telecom.