Reliance Communications hit by Indian mobile price war
Indian mobile phone network operator Reliance Communications Ltd posted its second straight quarterly loss on Saturday, hit by the price war which has broken out in the world’s second-biggest mobile market by number of users. The launch last year of rival Reliance Industries’ new Jio 4G broadband service with free voice and data services has forced other networks to come up with cheaper plans of their own, squeezing margins and in some cases dragging down sales, with bigger rivals Bharti Airtel, Idea Cellular and Vodafone India also suffering from the cut-price competition. Reliance Communications, controlled by billionaire Anil Ambani, said on Saturday it made a consolidated net loss of 9.66 billion rupees ($149.8 million) for its fiscal fourth quarter to March 31, compared with a 900 million rupees net profit in the same period a year earlier.
Four analysts had, on average, expected Reliance Communications to report a loss of 7.48 billion rupees, according to data compiled by Thomson Reuters. Revenue from operations fell about 24 percent from a year earlier to 43.12 billion rupees. Its heavy debt load – 428 billion rupees of net debt as on Dec.
31 – has also weighed on the performance of Reliance Communications, which is the most leveraged among listed Indian telecommunication carriers.
The latest debt figure as of end-March was not immediately available. But finance costs rose 24.3 percent from a year earlier to 9.83 billion rupees, the company said. Worries over its debt-servicing ability hit its shares and bonds this week.
To strengthen the business Reliance Communications is merging its wireless business with rival Aircel, and is also selling a 51 percent stake in its radio masts business to Canada’s Brookfield Infrastructure Group for 100 billion rupees ($1.54 billion).
The company expects its debt to fall by about 250 billion rupees this financial year after the completion of the deals, it said in Saturday’s statement.