RCom Reports Rs 1,210 Crore Consolidated Loss, Says Aircel Merger on Track

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Anil Ambani-led Reliance Communications has reported a third straight quarter consolidated loss of Rs 1,210 crore in the three-month period ended June 30, 2017, as compared to net profit of Rs 54 crore in a year earlier period, impacted by disruptive pricing and unprecedented competitive intensity in the country. The debt-laden company said that the telecom sector in India continues to be very adversely impacted during the financial year 2017-18 by competitive intensity on a scale never witnessed before in the country.


The company also attributed the loss to equity holders of the company during the reported quarter.

RCom posted Rs 3,591 crore revenue which was down 33% on-year from Rs 5,361 crore in the previous corresponding quarter. Its earnings before interest, tax, depreciation & amortisation (Ebitda) crashed over 65% on-year to Rs 543 crore from Rs 1,560 crore last year.

"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," RCom said in a statement.

RCom had earlier reported debt of about Rs 45,000 crore, and it has been given time till December by the lenders to service dues. However, it didn't reveal its debt status this time.

RCom is currently in a process to merger Sistema Shyam Teleservices and expects to complete merger with Sistema Shyam by end of this month. The merger will add 30 MHZ of 850 band spectrum in eight telecom circles. The validity of spectrum in these circles will remain till 2033.

The Anil Ambani-led telco is also in a process of merger and said that the merger of its mobile business with Aircel is on track. The merger, upon completion, will reduce its debt to the tune of around Rs 14,000 crore. In addition, it expects to further reduce the debt of Rs 11,000 crore by sale of its tower business to Brookfield Asset Management.

The National Company Law Tribunal (NCLT) may take a call on August 14 whether to admit the RCom-Aircel merger petition for consideration amid stiff opposition from lenders including China Development Bank, vendors such as Ericsson and Bharti Infratel, besides the DoT, according to reports.

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Telecom Analyst

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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