With the launch of GSM services with innovative idea of per second billing, which got tremendous response in the market, Tata Teleservices Maharashtra (TTML) has reported 9% growth in revenue on Q-o-Q and 5% growth Y-o-Y to Rs 538.60 crore for the quarter ended September 2009. Due to higher business promotion and advertising expenses and subscriber acquisition costs due to launch of GSM services, the OPM for the quarter dipped 780 bps sequentially and 1000 bps on Y-o-Y to 20.5%. Further the significant reduction in tariffs has impacted the margins of the company like other players in the industry. Consequently the operating profit was also lower 21% sequentially to Rs 110.18 crore. The loss at PAT level stood at Rs 116.12 crore, 239% higher sequentially and 145% higher on Y-o-Y.

The company has added 1.6 million subscribers during Q2 FY10 (5.09 lakh subscribers in Q1 FY10) with total subscriber base reaching to 9.6 million.

Consolidated performance for the quarter ended September 2009

With the launch of GSM services during the quarter with tremendous response in the market, the company could report 9% growth in Revenue on Q-o-Q and 5% growth Y-o-Y to Rs 538.60 crore. Due to higher business promotion expenses and subscriber acquisition costs due to launch of GSM services, the OPM for the quarter dipped 780 bps sequentially and 1000 bps on Y-o-Y to 20.5%. Further the significant reduction in tariffs has impacted the margins of the company like other players in the industry. Consequently the operating profit was also lower 21% sequentially to Rs 110.18 crore.

With higher other income (Rs 6.71 crore against 1.49 crore in Q1 FY10), which was more than offset by higher interest cost and depreciation charges on Y-o-Y due to new capex on GSM network. After considering forex loss of Rs 5.28 crore and EO gain of Rs 4.19 crore on sale of dark fibre and bandwidth capacities (against Rs 9.18 crore forex gain and Rs 16.66 crore EO loss in Q1 FY10), the loss at PAT level stood at Rs 116.12 crore, 239% higher sequentially and 145% higher Y-o-Y.

Consolidated performance for the Six months ended September 2009

For the Six months ended September 2009, the revenue increased by 2% Y-o-Y to Rs 1033.86 crore. The OPM for the period however dipped by 620 bps to 24.2% due to pressure on margin and higher expenses in Q2 FY10 due to launch of GSM services. As a combined result, operating profit stood 19% lower to Rs 249.91 crore.

The interest cost for the period was 47% higher at Rs 167.92 crore (excluding foreign exchange fluctuation loss). The depreciation charges for the period were 10% higher at Rs 253.15 crore and after considering Forex loss of Rs 8.28 crore (against forex loss of Rs 54.20 crore) and EO income of Rs 20.85 crore during H1 FY10 against Nil in H1 FY09, the loss at PBT after EO level increased by 84% Y-o-Y to Rs 150.38 crore. The company has not made any provision for current income tax due to anticipation of no taxable income for the period. At the end the company has reported net loss of Rs 150.38 crore, 83% higher from Rs 82.20 crore in H1 FY09.

Promoters Holding

As of September 30, 2009, promoters hold 77.72% shares (77.75% at end of sequential quarter), foreign investors hold 10.7% (0.93% at end of sequential quarter), MFs, Banks and other institutions hold 1.05% (0.73% at end of sequential quarter), and others hold 20.15% (20.58% at end of sequential quarter). The promoters have pledged 94.28 crore shares as on 30th September 2009 (63.92% of promoters holding and 49.70% of total share capital of the company), same as on 30th June 2009.

The shares of the company are currently trading at around Rs 27 (LTP on 29