Reliance Communications posts third consecutive quarterly loss at Rs1,221 crore
Mumbai: Indian telecoms carrier Reliance Communications Ltd (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%.
On Saturday, it reported a net loss of Rs1,221 crore for its fiscal first quarter ended June, against a profit of Rs54 crore a year earlier. Revenue from operations fell 33.6% year-on-year to Rs3,494 crore, while finance costs rose to Rs998 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% so far this year compared with an 18% rise of a broader Mumbai market. Reuters
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.