Reliance Communications (RCom) posted third straight quarterly loss with heavy debt and price war that is generated by the rival company. Anil Ambani a billionaire control the RCom has won an acquittal on its debt until the end of the year. It works on two asset sale deals and is expected to reduce its $7 billion debt by about 60 percent.
It is reported a net loss of 12.21 billion Indian rupees ($190.38 million) for its fiscal first quarter ended June, against a profit of 540 million rupees a year earlier. Revenue from operations fell 33.6 percent year-on-year to 34.94 billion rupees, while finance costs rose to 9.98 billion rupees.
The company’s continued to lose with the competition from free voice and cut-price data plans offered by Reliance Jio Infocomm, the telecom startup backed by Ambani’s elder brother Mukesh Ambani.
Jio has upended India’s uber-competitive telecom sector, forcing all incumbents to drop prices despite falling margins and profits. But RCom is fighting with its debt load and little success with its preliminary bet on a network based on CDMA technology that has also resulted in its current financial situation.
With 82.3 million customers as of end-May RCom is India’s seventh-ranked carrier. RCom is awaiting the regulatory approval for an amalgamation of the unit with rival Aircel. It has also agreed on a deal with Canada’s Brookfield to sell a stake in its mobile masts business.
The company has previously said it expected the transactions to close by September.
Uncertainties over the company’s capacity to pay back debt have led to a series of downgrades by rating agencies and the company’s stock that has tumbled 39 percent so far this year measure up to an 18 percent rise of a broader Mumbai market.