Reliance Communications" profits plummet - FT.com Reliance Communications" net profits have plunged nearly 60 per cent as the flagship telecoms company of billionaire Indian industrialist Anil Ambani's Reliance conglomerate continues under a heavy debt burden. Financing the company's Rs360bn ($6.6bn) net debt dragged down its bottom line in the quarter ending in September, as consolidated net profits fell to just Rs1.02bn, a nearly two-thirds drop from the same period last year. The company's financing costs increased 161 per cent year on year, to Rs5.93bn, which Gurdeep Singh, the company's chief executive, told the Financial Times included the impact of refinancing a foreign currency convertible bond. The full interest burden of a loan RCOM took out to pay third-generation spectrum fees also increased costs, he said. Quarterly revenues grew 3.2 per cent, to Rs52bn ($956.7m), year on year. In September, Mr Ambani moved to reassure concerned investors, with plans to reduce debt in part by suggesting he would in time revive a proposed listing of RCOM's undersea telecoms cable division in Singapore, following the cancellation of a planned float in July in the face of weak investor demand. RCOM's telecoms tower business, Reliance Infratel, has also been seen as a possible source of new equity capital in recent years, although attempts to offload all or part of the business have failed. The results show the company is likely to continue to struggle against heightened competition in India's crowded and cost-conscious telecoms markets, says Shobhit Khare of Motilal Oswal, a Mumbai-based brokerage. "The sheer number of players in the sphere is so high that to expect that things will dramatically improve is a little premature or optimistic," he said. However, the results came as Mr Ambani's company had at least one temporary reprieve, following a decision by India's government to delay a special charge on the company for ownership of so-called "excess spectrum." Following a cabinet meeting in New Delhi on Thursday, the administration confirmed it would wait to levy the planned fee on operators using a wireless technology known as CDMA, including Reliance and the mobile arm of the Mumbai-based Tata group. For now, a collective $5.7bn charge will fall only on operators using a technology known as GSM, which is owned by companies including market leaders by revenue Bharti Airtel, Vodafone, and IDEA. The spectrum charge was criticised by telecoms analysts, already concerned by government decisions seen as harmful to the industry, including what they see as excessively high base prices for upcoming 2G spectrum auctions. The three leading companies, along with Norway's Telenor and Indian conglomerate Videocon, will participate in auctions for second-generation GSM spectrum starting Monday. RCOM will not participate. "The decision to levy one-time fee on excess spectrum held by incumbents is going to distress the sector even further," said Prashant Singhal, telecoms partner at Ernst & Young, "particularly at a time when the profits and margins are under pressure owing to stiff competition and interest costs." India's government has justified the one-time charge as part of a plan to create a level playing field between operators, who had acquired types of spectrum at different periods of the industry's development. Critics of the government and industry bodies, however, suggest the move is part of a wider drive to raise extra revenue by the state at a time in which operators are already struggling with fast-rising debt levels and must invest in new technologies.