Hughes Tele.com (HTL), the private sector basic telephony service provider in Mumbai and Maharashtra, has reported a robust growth in sales for 1QFY02. Income from telephony services has increased by 85.2% to Rs 1,160 m for the first half of the current year. It has also posted an operating profit for 1HFY02.
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HTL has been expanding its network and currently provides communication services through over 100,000 lines connected to business and residential customers in 10 cities. These include Mumbai, Navi Mumbai, Pune, Panjim, Nasik, Nagpur, Ahmednagar, Kolhapur, Aurangabad, Sangli and some villages in rural and remote areas. Hughes has also commenced the commercial operations of its Internet Service Provider (ISP) business.
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The company, for the second quarter in succession, has posted a cash operating profit. Operating profit for 1HFY02 stood at Rs 38 m compared to a loss of Rs 77 m in the corresponding quarter of the previous year. Interest and finance charges have doubled in 1QFY02 and this could be due to the expansion of networks. Extraordinary item here refers to miscellaneous income written off to the extent of Rs 15 m. Net loss for 1QFY02 stood at Rs 827 m as compared to Rs 296 m in 1QFY01 due to higher provisioning for deferred taxation.
HTL has added 15,000 subscribers in the second quarter and is in line with 1QFY02 trend. If the company were to achieve the target of 200,000 subscribers by March 2002, it has got to double its base in the next six months. Though HTL is hopeful of achieving the target, doubling subscriber base in a span of six months seem to be a stiff task. However, since HTL has extended its service to 10 cities (atleast three of them in 2QFY02), growth in subscriber base could accelerate towards the end of the year.
Average revenue per subscriber (ARPU) has declined marginally in 2QFY02. This could be attributed to the new connections and therefore is not a major cause for concern. Since HTL caters primarily to the corporate segment, its ARPU is twice MTNL's ARPU. Having commenced its ISP and broadband services, one could expect a higher growth in telecom revenues in the coming quarters.
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