India's Reliance Communications Reports Profit Drop

Reliance Communications, India's second largest mobile services provider, added 11.3 million new mobile subscribers in the first quarter of this year. But the company's basement pricing of its mobile services may have cost the company in terms of profits.The company's profits fell by 3.3 percent to 14.5 billion Indian rupees (US$280 million at the exchange rate on the last day of the quarter) in the quarter ended March 31, from 15 billion rupees in the same quarter a year earlier.The company's revenue in the quarter grew by 10.5 percent to 58 billion rupees from 52.5 billion rupees, Reliance said on Thursday.Reliance diversified in the first quarter from mobile services based on CDMA (Code Division Multiple Access) technology, to also roll out a network based on GSM (Global System for Mobile Communications).India's mobile market continues to boom, even though growth in sales of other technology products like PCs have flattened. Mobile phones are seen as a necessity by consumers, according to analysts.The country's largest mobile services company, Bharti Airtel, reported on Wednesday that revenue for the quarter was 98.25 billion rupees, up by 26 percent from the same period last year. Profits were Rupees 22.4 billion, up by 21 percent from profits in the same quarter a year earlier.The company added 8.4 million new customers in the quarter.Bharti's chairman and managing director, Sunil Bharti Mittal, told analysts in an earnings call that the company would not resort to unreasonable pricing, even though competition in the market is increasing.Bharti said its focus on India's relatively untapped rural markets had paid off.

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