Ortel sees further declines in Q3, hints at Q4 clean-up

Ortel Communications (Ortel), the Orissa-based cable and broadband services provider, reported a loss of Rs 6.6 cr for the third quarter as its broadband business was hit by 4G providers and cable business was under competitive pressure from DTH services.

The loss of 6.6 cr compared with a loss of Rs 1.5 cr last year, and in the preceding quarter, net loss of Rs 5.7 cr in the preceding quarter.

However, CEO Bibhu Prasad Rath said the company may take drastic action to rid itself of debt in the coming quarter.

“The management is actively reviewing the details in the context of Analog-to-Digital conversions as well as integration challenges, and if required will take affirmative step in Q4 to reduce the debtor days. This may significantly impact our profit and loss in Q4.

“However, this will help us to start afresh in FY19 and restore our business momentum.”

Revenue from operations fell 18% on year and 1% on quarter to Rs 43.6 cr. Out of this, broadband revenue nearly halved to 5.2 cr from 8.7 cr a year ago.

However, broadband revenue increased 3.1% on quarter as the company cut its prices aggressively to retain customers.

Broadband subscription revenue increased because the company was able to generate more revenue from each subscriber during the quarter.

ARPU jumped to Rs 263 per month per customer from Rs 223 in the preceding quarter, but was down from Rs 394 in the year-ago period.

Broadband prices have declined drastically over the last one year because of the entry of 4G wireless providers, particularly Reliance Jio.

To cope, Ortel has had to slash its tariffs sharply last year.

Average consumption per customer increased to 22 GB per month from 18 GB in the previous quarter and 20 GB in the year-ago period.

On the cable side, there was no such turnaround.

Cable revenues fell 24% on year and 3% on quarter to Rs 34.3 cr. This was due to a 23% fall in carriage fees paid by broadcasters and a 12.4% fall in subscription fees collected from consumers.

Unlike in case of broadband, there was no turnaround in consumer subscription revenue on a sequential basis either, and it fell 5.6% on quarter to Rs 26.3 cr.

New connection fees remained stable on a sequential basis at Rs 2.2 cr, but was down 71% on year.

Operating profit or EBITDA came in at Rs 8.6 cr compared to Rs 13.6 cr last year.

Despite the deteriorating financial performance, the company continued to make detailed data of its operations available in its quarterly update. Typically, companies that tend to dive into losses stop making detailed disclosures.

“Our Q3 performance has to be seen in light of continuous challenges faced by us in the form of delay in collections, higher competitive intensity in the market place as well as issues pertaining to debt repayment,” CEO Rath said.

“We are consciously working on all these parameters and our objective is to improve our overall performance in the future,” he said.

“Moreover, initiatives undertaken in the Broadband business will result in lesser churn & higher sales thereby limiting further fall in the subscriber base. Overall, we continue to believe in our B2C focused ‘last mile’ business model which enables us to be directly connected with our customers. This gives us comfort and confidence that we will be able to turnaround our business,” he added.

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