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Rupee's downslide: Reliance Communications to pass input costs to customers

“The phase of hyper competitiveness is over. Further price hikes cannot be ruled out,” Gurdeep Singh told ET.

, ET Bureau|
Sep 06, 2013, 04.00 AM IST
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“The phase of hyper competitiveness is over. Further price hikes cannot be ruled out,” Gurdeep Singh told ET.
“The phase of hyper competitiveness is over. Further price hikes cannot be ruled out,” Gurdeep Singh told ET.
NEW DELHI: Reliance Communications is likely to pass on any increase in input costs due to the weakening rupee to its customers as the mobile phone operator now has the pricing power due to lesser competition, the president & CEO of RCOM’s wireless business said.

“The phase of hyper competitiveness is over. Further price hikes cannot be ruled out,” Gurdeep Singh told ET.

Domestic mobile phone operators import a lot of equipment the costs of which have risen thanks to the sharp fall in the rupee against the dollar. The cost of diesel has also been on the rise, putting further pressure on the margins of the companies which are huge consumers of the fuel that is used to operate the base stations.

The end of the phase of intense competition meant an improved April-June quarter for pan-India mobile phone operators including RCOM who benefitted from the rise in effective call rates and growth in data revenue.

“The full (positive) impact of the increase in call rates will be felt in this (July-September) quarter,” Singh said. He, however, cautioned that the threemonth period is usually a weak one for the industry due to monsoons.

Despite improving fundamentals, analysts say RCOM’s huge debt — which has been a drag on the company’s financials for some years now— will continue to be the focus of investors, especially as rupee’s over 19% fall against the greenback in the last three months is likely to further increase forex losses.

Singh declined to comment on the efforts by the Anil Ambani owned Reliance Group flagship company to pare its huge debt which stood at Rs 38,400 crore on June 30.

RCOM has been in talks to sell stakes in whollyowned wholesale telecommunications unit Reliance Globalcom BV and in its unit running direct-tohome operations, Reliance Digital TV, but they haven’t materialized till now. The company has previously said that the talks are progressing.

Operationally though, RCOM plans to strengthen its focus on data and GSM voice services for future growth. It expects to increase its revenue from GSM voice and data services to 80% of total income in a year, from about 67% now, Singh said, underlining its shift away from CDMA voice services.

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