Jio Effect: Reliance Communications Posts Third Consecutive Quarterly Loss

NDTV Aug 12, 2017 03:01 pm
RCom, controlled by billionaire Anil Ambani, has won a reprieve on its debt until the end of the year as it works on two asset sale deals that it expects will reduce its $7 billion debt by about 60 percent.
RCom is awaiting regulatory approval for a merger of the unit with rival Aircel.
RCom is awaiting regulatory approval for a merger of the unit with rival Aircel.
Mumbai: Indian telecoms carrier Reliance Communications (RCom) posted its third straight quarterly loss on Saturday as its heavy debt load and a price war triggered by an upstart rival continued to weigh on sales and profit.

RCom, controlled by billionaire Anil Ambani, has won a reprieve on its debt until the end of the year as it works on two asset sale deals that it expects will reduce its $7 billion debt by about 60 percent.

On Saturday, it reported a net loss of Rs 1,221 crore ($190.38 million) for its fiscal first quarter ended June, against a profit of Rs 54 crore a year earlier.

Revenue from operations fell 33.6 percent year-on-year to Rs 3,494 crore, while finance costs rose to Rs 998 crore.

The company's continued losses are, in part, a result of competition from free voice and cut-price data plans offered by Reliance Jio Infocomm, the telecom startup backed by Ambani's elder brother Mukesh.

Jio has upended India's uber-competitive telecom sector, forcing all incumbents to drop prices despite falling margins and profits.

But RCom's struggle with its debt load and little success with its initial bet on a network based on CDMA technology have also led to its current financial situation.

RCom, whose mobile phone unit is India's seventh-ranked carrier with 82.3 million customers as of end-May, is awaiting regulatory approval for a merger of the unit with rival Aircel. It has also agreed a deal with Canada's Brookfield to sell a stake in its mobile masts business.

The company has previously said it expected the transactions to close by September.

Worries over the company's ability to repay debt have led to a series of downgrades by ratings agencies and the company's stock has plummeted 39 percent so far this year compared with an 18 percent rise of a broader Mumbai market.

($1 = Rs 64.1350)

© Thomson Reuters 2017



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