RCom Q4 loss widens to Rs 966 cr, co says earnings hit by ‘disruptive pricing, hyper competition’

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Anil ambani

New Delhi: Telecom player Reliance Communications reported loss of Rs 948 crore for the fourth quarter ended March 2017, hurt by intense price war unleashed by newcomer Jio. Reliance Communications – promoted by Anil Ambani – had registered net profit of Rs 79 crore in the corresponding period of the previous year, as per a regulatory filing.

“The telecom sector in India has been very adversely impacted during 2016-17 by competitive intensity on a scale never witnessed before in the country,” RCom said in a statement. The sector, it noted, has been “severely impacted” on account of “free offers, disruptive pricing and hyper competition”. The loss — after minority interest — widened to Rs 966 crore in the just-concluded quarter against Rs 531 crore in the December quarter, according to the statement.

The company registered consolidated total income of Rs 4,524 crore during the January-March quarter, nearly 24 percent lower than the year-ago period.

For the full year 2016-17, the loss stood at Rs 1,283 crore against net profit of Rs 660 crore in 2015-16.

Total income during the year ended March 2017 at Rs 19,949 crore was 10.8 percent lower than the previous fiscal.

The company said the financial performance was affected on account of “crisis in the sector, resulting in first time full-year loss since inception”.

The merger of RComs wireless business with Aircel is at final stages of approval, it said, adding that this will lead to debt reduction of Rs 14,000 crore and provide substantial revenue, capex and opex (operational expenditure) synergies to the merged entity.

The sale of tower business to Brookfield is also in final stages of approval and will lead to debt reduction of Rs 11,000 crore.

Overall, RCom expects debt to reduce by Rs 25,000 crore on completion of the transactions during this financial year.

The latest result comes at a time when telecom operators in the country are facing pressure on income, profitability and other financial metrics on account of competition intensified by the entry of Reliance Jio — owned by Mukesh Ambani.

Earlier this month, Idea Cellular reported a consolidated loss of Rs 325.6 crore in the 3-month period ended March 2017, hurt by the severe tariff war.

Indias largest telecom operator Bharti Airtel, too, reported its lowest quarterly profit in four years as net earnings slumped 72 per cent in January-March, hit by “sustained predatory pricing” by rival Reliance Jio.

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