RCom reports loss of Rs 948 crore in Q4 on disruptive pricing, competition

Anil Ambani owned telecom company RCom has reported a loss of Rs 948 crore for the fourth quarter (Q4) ended on March 31, 2017 on back of intense price war in the telecom sector due to the entry of Reliance Jio which has hurt the profitability and income of the company.

RCom reports loss of Rs 948 crore in Q4 on disruptive pricing, competition
Reliance ADAG chairman Anil Ambani with his wife Tina and son Anmol Ambani during Reliance Capital's annual general meeting (AGM) in Mumbai, on September 26, 2016. Image Source: IANS
By PTI
Updated: Sun, May 28, 2017
10:37 am
New Delhi , PTI
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Telecom player Reliance Communications (RCom) on Saturday reported loss of Rs 948 crore for the fourth quarter (Q4) ended on 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 hypercompetition".

ALSO READ: RCom reports net loss of Rs 531 crore in Q3

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% 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% 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 RCom's 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.

ALSO READ: After Sebi, now CCI gives nod to RCom-Aircel merger

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 three-month period ended March 2017, hurt by the severe tariff war.

India's largest telecom operator Bharti Airtel, too, reported its lowest quarterly profit in four years as net earnings slumped 72% in January-March, hit by "sustained predatory pricing" by rival Reliance Jio.

ALSO READ: RCom shareholders approve demerger of tower business