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Headline results: weak revenue drives bottom-line miss: Reliance
Communications (RCOM) reported Q1 consolidated revenue of INR
49.4bn, (-7% Q/Q, -3% Y/Y), missing JPMe/cons by 9% each. The miss vs.
our estimates was driven by the Global, Broadband (GEBU) and Other
segments. EBITDA margin was strong at 32.4% (+2.6pp Q/Q, +0.5pp Y/Y)
and beat JPMe/cons of 30.7%/30.8%. We note that Other expenses (network
and SG&A costs) were lower than expected. EPS was INR 0.76 ahead of
JPMe of IN 0.61 (due to lower depreciation & amortization charges) but a
miss vs. consensus estimate of INR 1.0. RCOM has released standalone and
consolidated financials but is yet to release its full quarterly report.
Wireless metrics slightly ahead; ARPMs flat for the 6th consecutive
quarter: Total wireless minutes grew 3.1% Q/Q to 97.3bn inline with JPMe
of 3%. This was below peers: Bharti saw +4.6%, 6.5% for Idea, 7.0% for
Vodafone. Reported ARPM was 44 paisa flat Q/Q vs. JPMe of -
0.7%/0.3paisa decline. This is RCOM’s 6th quarter of ARPM being stable
at 44paisa. We calculate that RCOM’s MOU declined 3.5% Q/Q to 233
(JPMe 232) and ARPU was INR 103 down 3.4% Q/Q (JPMe of INR102).
Wireless margins disappoint: Wireless revenue at INR 43.3bn was up 3%
Q/Q and 4% Y/Y and 1% ahead of JPMe, likely helped by stable ARPMs.
However EBITDA margin here was 27.1% (-30bp Q/Q; -1.8pp Y/Y) and
missed JPMe by 1pp. Absolute EBITDA of INR 11.7bn (+2% Q/Q, -2%
Y/Y) was 3pp below JPMe.
Global + Broadband = GEBU: RCOM has merged its Global and
Broadband segments into "Global Enterprise Business Unit" (GEBU).
Revenue in this segment was weak at INR 22.9bn (-12.6% Q/Q, -8.0% Y/Y)
missing JPMe by 12%. We estimate that EBITDA in this segment was ~INR
5.6bn (35% of consolidated EBITDA), lower than JPMe by 9% and down
8% Q/Q, 3% Y/Y. However, the implied margin of 24.5% shows a ~1pp
improvement from last quarter.
Net profit: miss vs. consensus: Net income of INR 1.56n (-7.4% Q/Q), beat
JPMe of INR 1.26bn due to lower D&A expenses. D&A was INR 9.8bn in
Q1 down from INR 10.2bn in Q4. RCOM was to start amortizing its 3G
license fee from Q1 so we had expected an increase. We’re looking for more
clarity on this point from management. However net profit missed consensus
expectation of INR 2.1bn by a large margin. EPS was INR 0.76
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Headline results: weak revenue drives bottom-line miss: Reliance
Communications (RCOM) reported Q1 consolidated revenue of INR
49.4bn, (-7% Q/Q, -3% Y/Y), missing JPMe/cons by 9% each. The miss vs.
our estimates was driven by the Global, Broadband (GEBU) and Other
segments. EBITDA margin was strong at 32.4% (+2.6pp Q/Q, +0.5pp Y/Y)
and beat JPMe/cons of 30.7%/30.8%. We note that Other expenses (network
and SG&A costs) were lower than expected. EPS was INR 0.76 ahead of
JPMe of IN 0.61 (due to lower depreciation & amortization charges) but a
miss vs. consensus estimate of INR 1.0. RCOM has released standalone and
consolidated financials but is yet to release its full quarterly report.
Wireless metrics slightly ahead; ARPMs flat for the 6th consecutive
quarter: Total wireless minutes grew 3.1% Q/Q to 97.3bn inline with JPMe
of 3%. This was below peers: Bharti saw +4.6%, 6.5% for Idea, 7.0% for
Vodafone. Reported ARPM was 44 paisa flat Q/Q vs. JPMe of -
0.7%/0.3paisa decline. This is RCOM’s 6th quarter of ARPM being stable
at 44paisa. We calculate that RCOM’s MOU declined 3.5% Q/Q to 233
(JPMe 232) and ARPU was INR 103 down 3.4% Q/Q (JPMe of INR102).
Wireless margins disappoint: Wireless revenue at INR 43.3bn was up 3%
Q/Q and 4% Y/Y and 1% ahead of JPMe, likely helped by stable ARPMs.
However EBITDA margin here was 27.1% (-30bp Q/Q; -1.8pp Y/Y) and
missed JPMe by 1pp. Absolute EBITDA of INR 11.7bn (+2% Q/Q, -2%
Y/Y) was 3pp below JPMe.
Global + Broadband = GEBU: RCOM has merged its Global and
Broadband segments into "Global Enterprise Business Unit" (GEBU).
Revenue in this segment was weak at INR 22.9bn (-12.6% Q/Q, -8.0% Y/Y)
missing JPMe by 12%. We estimate that EBITDA in this segment was ~INR
5.6bn (35% of consolidated EBITDA), lower than JPMe by 9% and down
8% Q/Q, 3% Y/Y. However, the implied margin of 24.5% shows a ~1pp
improvement from last quarter.
Net profit: miss vs. consensus: Net income of INR 1.56n (-7.4% Q/Q), beat
JPMe of INR 1.26bn due to lower D&A expenses. D&A was INR 9.8bn in
Q1 down from INR 10.2bn in Q4. RCOM was to start amortizing its 3G
license fee from Q1 so we had expected an increase. We’re looking for more
clarity on this point from management. However net profit missed consensus
expectation of INR 2.1bn by a large margin. EPS was INR 0.76
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