RCom Net Loss Widens at Rs. 966 Crore in Q4, Impacted by Free Offers and Hyper-Competition

Reliance Communications’ net loss widened in the fourth quarter at Rs 966 crore from Rs 531 crore net loss in the previous quarter, due to free offers, disruptive pricing and hyper competition in the market, the company said in a statement on Saturday.

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The Anil Ambani-led telecom service provider stated that it suffered a net loss of Rs 1,285 crore for the year, compared to a net profit of Rs 660 crore in the previous year, owing to the drop in revenues, decline in EBITDA margin for the year from 34.2% to 27%, and increase in interest costs.

The telco said that industry in India had been very adversely impacted during the financial year 2016-17 by competitive intensity on a scale never witnessed before in the country.

“For the first time in over 20 years, the telecom sector registered de-growth in revenues, leading to a reduction in the Government’s share in revenues, sharp drop in operating margins, accompanied by increased interest costs arising from a staggering industry debt burden, and higher depreciation and amortisation charges as a result of higher spectrum purchase costs,” it said.

RCom added that steep declines in profitability or net losses had been reported for the past two quarters by all telecom operators in the country without exception, and a couple of operators have shut down their entire operations in the country.

The telco’s consolidated revenues stood at Rs 4,524 crore in the fourth quarter, down 8.1%. EBITDA stood at Rs 1,083 crore, down 10.2%, compared to the trailing quarter, in line with industry trends, and led by the impact of free offers, disruptive pricing and unprecedented competitive intensity in the industry, the company said.

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RCom’s EBITDA margin declined by 24%, compared to 24.5% in the trailing quarter. During the quarter, RCom’s Indian operations’ revenues and EBITDA stood at Rs 3,916 crore and Rs 908 crore respectively; while Global revenues and EBITDA were Rs 988 crore and Rs 175 crore respectively.

For the overall year, RCom’s consolidated revenues stood at Rs 19,949 crore, down 10.8%, on account of free offers. The telco said that disruptive pricing and unprecedented competitive intensity in the industry, along with the impact of the complete shutdown of RCom’s CDMA operations during the first half of the fiscal year resulted in a decline in revenue. It added that revenue was also impacted by the company’s move to shift to higher cost ICR arrangements in 5 circles consequent upon the end of the validity period of 900 MHz spectrum held by the company.

For the fiscal year, RCom suffered a net loss of Rs. 1,285 crore for the year, compared to a net profit of Rs 660 crore in the previous year, owing to the drop in revenues, the decline in EBITDA margin for the year from 34.2% to 27%, and increase in interest costs.

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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