RCOM Q1 operating income at Rs 5,315 cr, up 3.6%

Reliance Communications (RCOM) today announced its Q1 operating income at Rs 5,315 crore, up 3.6 percent from Rs 5,130 crore in Q4.

EBITDA for Q1 stood at Rs 1,701 crore, up 2 percent on comparable basis from Rs 1,668 crore in Q4. EBITDA margin at 31.4 percent, amongst the highest in the industry, with strong contribution from both Wireless and GEBU (global enterprise business unit) businesses. Net profit is at Rs 108 crore.

Wireless revenue stood at Rs 4,816 crore, up 4.1 percent q-o-q from Rs 4,626 crore in Q4. RPM increased to 45.7 paisa, up 4 percent q-o-q. RPM has significantly improved thanks to tariff hikes and strong focus on paid and profitable minutes. Global Enterprise (GEBU) Q1 revenues is at Rs 2,300 crore, down by 6.7 percent from Rs 2,466 crore in Q4.

RCOM continues to be free cash flow positive. RCOM generated operational cash flow (EBITDA) of Rs 1,701 crore in Q1. The company remains free cash flow (FCF) positive and this shall continue in succeeding years.

RCOM has also completed full repayment of two syndicated ECB Loan facilities aggregating $1 billion. These loans were availed in the year 2007 from a group of international banks.

In addition, RCOM has made scheduled repayments of another $207 million (Rs 1,200 crore) in respect of other foreign currency loans, on the respective due dates during the quarter ended 30th June, 2013.

The repayments have been from RCOM’s rupee resources. RCOM’s foreign currency debt is steadily declining every year, and the interest outgo on such debt is fully covered by dollar denominated earnings from the Reliance Globalcom business.

RCOM announced that its board of directors has in-principle decided on a demerger of the real estate held by RCOM into a separate unit, Reliance Properties, to unlock substantial value for the benefit of its approx 2 million institutional and retail shareholders.

The proposed separation of real estate into a separate unit is a part of RCOM’s strategic plan to divest non-core assets, and focus on its core wireless and enterprise business.

Reliance Properties will be a separate listed company. All shareholders of RCOM will receive fully tradeable pro-rata shareholding in Reliance Properties, free of cost, based on their existing shareholding in RCOM.

The board has constituted a committee to consider the matter in detail, and prepare the necessary demerger scheme, etc. in consultation with legal and other advisors. The demerger will be subject to approvals from shareholders, lenders, courts, etc.

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