Sunday, 24 September 2017

RCom swings to €162m fiscal Q1 loss

By Nick Wood, Total Telecom
Tuesday 15 August 17

Struggling Indian operator laments 'unprecedented competitive intensity' as revenue plunges 33%.

Reliance Communications this week revealed it swung to a fiscal first quarter loss, as India's relentless price war took its toll. Revenue in the three months to 30 June plunged 33% year-on-year to 35.91 billion rupees (&euro…

Reliance Communications this week revealed it swung to a fiscal first quarter loss, as India's relentless price war took its toll.

Revenue in the three months to 30 June plunged 33% year-on-year to 35.91 billion rupees (€476.23 million), while EBITDA slumped by 65.2% to INR5.43 billion. The operator swung to a INR1.22 billion net loss from a year earlier profit of INR540 million.

In a statement on Saturday, RCom blamed "disruptive pricing and unprecedented competitive intensity in the industry" for its poor performance.

RCom has been rocked by the price war sparked last year by disruptive newcomer Reliance Jio Infocomm.

RCom reported its first ever full year loss in May, and in June it had to negotiate a later repayment deadline with its lenders, prompting multiple downgrades by various ratings agencies.

RCom has pinned its hopes for generating cash to pay down debt, and saving its mobile business, on two deals: the merger of its mobile operation with Aircel's, and the INR110 billion sale of a controlling stake in its towers business, Reliance Infratel, to asset manager Brookfield.

The Aircel deal will create a player with 448 MHz of spectrum and 171.66 million mobile subscribers, according to figures published this week by the Telecom Regulatory Authority of India (TRAI). The tie-up is expected to generate up to INR200 billion in synergies.

Both that deal and the Infratel stake sale took important steps closer to completion this week.

The Economic Times reported on Tuesday that both the Aircel merger and the towers sale have been approved by the National Company Law Tribunal (NCLT). A hearing for the final approval of both transactions is scheduled for 13 September.

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