Rcom’s Q3FY10 results were below expectations on the revenue and EBITDA front on account of a steeper decline in Globalcom and Broadband revenues than anticipated.
The EBITDA margin declined sequentially by 128bps due to the drop in revenue and a 15.3% increase in access charges, which was only partly offset by a decline in network / SG&A cost.
PAT was ahead of our estimates with a growth of 56.6% QoQ on account of finance income of Rs 4bn as against a finance charge of Rs 6.5bn in the previous quarter. Rcom’s finance charge accounting remains a difficult area to comprehend.
The flat trend in wireless revenue was a positive sign, though the steep fall in Globalcom and Broadband revenues surprised negatively. Wireless revenue increased QoQ by 0.3% on the back of 8.6% subscriber growth and a 7.4% fall in ARPU. ARPU declined from Rs 161 to Rs 149 QoQ.