RailTel Telecom Revenues Grow With Strong Growth in ISP Services

The telecom revenues of RailTel were up 29.3% YoY to Rs 2.7 billion. The increase in revenue has been driven because of the surge in the internet service provider (ISP) segment.

Highlights

  • RailTel Corporation recently reported its Q2 FY22 profits at Rs 675 million.
  • Strong subscriber addition in RailWire helped the average revenue per user (ARPU) to grow to Rs 500.
  • RailTel will see strong revenue growth even in the coming half of FY22.

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RailTel Corporation recently reported its Q2 FY22 profits at Rs 675 million. It is a 29% YoY growth because of the rise in telecom revenues and reversal of ECL provisioning. The company’s project revenues did not grow in the first half of FY22, but the company is positive about the remaining half. With the growth momentum the company has, ICICI Securities said that RailTel is guided for at least 25% higher revenues in the FY22. Since listing, the company has grown by 25%, which is a healthy sign. RailTel is also eyeing projects worth Rs 70 billion to Rs 100 billion from the Railways for implementing high-speed data connectivity on the 700MHz band. The company is further planning to expand the towers to 5,000 from the current 1,100. ICICI Securities has maintained its ‘Buy’ call on the company and has increased earnings per share (EPS) by 5.3% / 4% for FY22E / FY23E.

RailTel Telecom Revenues Grew Because of Strong Growth in ISP Services

The telecom revenues of the company were up 29.3% YoY to Rs 2.7 billion. The increase in revenue has been driven because of the surge in the internet service provider (ISP) segment. For the unaware, RailTel has an ISP arm called RailWire.

Strong subscriber addition in RailWire helped the average revenue per user (ARPU) to grow to Rs 500. The total number of subscribers in the quarter grew to 422,000 as compared to 318,000 in FY21.

ICICI Securities report mentions that RailTel will see strong revenue growth even in the coming half of FY22. This is due to certain projects that the company is expecting to execute from the Railways and coal companies. The company’s telecom services earnings before interest and tax (EBIT) grew 75% YoY to Rs 707 million.

In H2 FY22, the company expects revenue growth of 25% compared to H1 FY22 growth of 23.8%. Telecom revenues of the company should grow further as more projects are completed.

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