Reliance Communications (RCOM) Q4 FY09 Results and Highlights

• consolidated net profit went up 3.12% at Rs 1,454.3 crore from Rs 1,410.3 crore (QoQ).
• consolidated net sales increased 1.5% to Rs 5,522.8 crore vs Rs 5,441.5 crore (QoQ).
• Q4 other income up at Rs 325.9 crore vs Rs 178.42 crore.
• RCOM added 11 million subscribers in Q4.
• RCOM now has total subscriber base at 73 million (second behind 94 million of Bharti Airtel)
• Low cost service will help margin despite competitive tariffs.
• Wireless market share has increased from 18% to 19% in Q4.
• Communication Towers (Passive Infrastructure) : RCOM added 5,000 towers in Q4; total tower base is 48,000
• RCOM launched Net Connect broadband programme with speed at 3.1 mbps
• Capex intensity is to reduce substantially in FY10.
• FY10 capex guidance at Rs 10,000 crore; lesser than preliminary guidance of Rs 15,000 crore.

We believe RCOM offers a good long term India investment opportunity despite near term problems in revenues, because it has been building an infrastructure with latest technologies, for economies of scale, and has lined-up diverse services for stability in revenue sources, and actively acquired other companies where RCOM did not have depth. Therefore, we believe in the growth potential of RCOM, and the buisness will generate cash flows in the coming years.