Hughes Tele.com, the basic and broadband service provider in Maharashtra and Mumbai, has reported a robust growth in sales for 1QFY02. Net revenues have gone up sharply by 81.7% to Rs 545 m backed by a 13.3% rise in subscriber base in 1QFY02 to 85,000 (70,000 in FY01).
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The results are encouraging when considering that the company has achieved cash break-even in the second year of operation itself. Operating profit for 1QFY02 stood at Rs 21 m as compared with a loss of Rs 50 m in the corresponding period of the previous year. Other income has gone up significantly and includes Rs 83 m as revenues from short term investments/deposits of surplus funds, which are non recurring in nature.
Despite higher write-off of miscellaneous expenditure and depreciation charges (due to continuous expansion of network), net loss have come down sharply by 21.8% to Rs 303 m. The company has set a target of 200,000 subscriber lines by end of March 2002 and it seems to be on target. It has rapidly built out its broadband fiber optic network and currently serves over 85,000 subscriber lines in 8 cities - Mumbai, Navi Mumbai, Pune, Nasik, Nagpur, Panaji (Goa), Kolhapur and Ahmednagar. Services in 2 more cities - Sangli and Aurangabad are expected to commence shortly. Besides, Hughes has plans to launch its ISP services soon (planned to launch by December 2001), which should enable the company to post higher topline growth in coming quarters. Hughes is also slated to offer Advance Intelligent Network Services (AINS) like calling card services, premium rate services and freephone services.
Since Hughes caters predominantly to corporates, its revenue per subscriber is on the rise on a Q-o-Q basis. Revenue per subscriber has gone up sharply by 38.1% to Rs 25,655 as compared to Rs 18,564 in FY01. With the launch of its broadband services, one would expect revenues to improve in the coming quarters also. However, the growth in subscriber base has slowed down despite expansion of services in two more cities in the first quarter of the current year. As against an average of 20,000 new subscribers every quarter, in 1QFY02, subscriber base has increased by just 10,000, which is a cause of concern. With new players like Reliance and Tata Power venturing into broadband services competition might affect revenue growth in coming quarters. Nevertheless, this is a commendable performance.
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