UPDATE 1-India's Reliance Communications sees profit fall

Last Updated: Wed, Jan 23, 2013 14:10 hrs

* Net profit at 1.05 bln rupees vs 1.83 bln rupees consensus

* Revenue up 5 pct from year earlier, beats estimates

* Reliance Comm struggling with $6.9 bln debt (Adds details, company comment)

By Devidutta Tripathy

NEW DELHI, Jan 23 (Reuters) - Reliance Communications Ltd , India's No.3 mobile phone carrier by customers, reported a decline in profit for the second straight quarter as its finance costs jumped.

Consolidated net profit at the carrier, controlled by billionaire Anil Ambani, fell a sharper-than-expected 44 percent to 1.05 billion rupees ($20 million) for its fiscal third quarter ended December, from 1.86 billion rupees a year earlier.

Gurdeep Singh, chief executive of Reliance Communications' wireless business, attributed the bigger-than-expected profit fall to a jump in interest costs as the company last year refinanced foreign currency convertible bonds (FCCBs) of $1.18 billion through loans from a clutch of Chinese banks.

However, the company saw growth in key operating metrics such as average revenue per user in the December quarter, Singh said in a phone interview.

Reliance Communications' net debt of about $6.9 billion as of December, or more than five times its annualised operating profit, makes it the most-leveraged Indian phone carrier. The company has so far had little success in its efforts to raise funds via stake sales in its units.

A planned sale of its telecommunication tower unit that had been expected to raise about $3 billion has dragged on for more than two years. The company hopes to sell a stake in the unit in this year, Ambani told shareholders in September.

In July, it was forced to shelve a Singapore public offering of its undersea cable unit due to weak investor demand and has said it will attempt again to list the unit.

The outlook for bigger phone operators like Reliance Communications and its main rivals, Bharti Airtel Ltd, Vodafone Group Plc's local unit and Idea Cellular Ltd , has improved as a court order to revoke permits of several smaller carriers is expected to reduce competition.

Carriers in the world's second-biggest mobile phone market, however, face an uncertain regulatory environment and have been asked to pay new fees for airwaves.

Revenue rose an annual 5 percent to 53.01 billion rupees. Analysts had expected the company to report a net profit of 1.83 billion rupees on revenue of 52.80 billion rupees, according to Thomson Reuters I/B/E/S.

Reliance Communications' finance costs, which include interest expenses, rose 59 percent to 6.05 billion rupees in the December quarter from 3.81 billion rupees a year earlier. Operating (EBITDA) margin for the quarter fell to 31.2 percent from 31.9 percent a year earlier, it said in a statement.

Monthly average revenue per user grew 17 percent sequentially to 119 rupees, while minutes of usage per subscriber rose 15 percent sequentially to 271 minutes, Singh said. Revenue per minute was at 0.44 rupees for the quarter.

Ahead of the results, Reliance Communications shares valued at about $3.4 billion closed 0.5 percent higher after rising as much as 3 percent on hopes that rivals will follow market leader Bharti Airtel in raising call prices. ($1 = 53.8150 Indian rupees) (Additional reporting by Aradhana Aravindan; Editing by Matt Driskill and Elaine Hardcastle)

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