RComm slips deeper into the red in Jan-Mar as Rel Jio hits data biz

Anil Ambani Group-promoted Reliance Communications Ltd slipped deeper into the red in Jan-Mar as cut-throat offers from new entrant Reliance Jio Infocomm dragged down consolidated revenue. The telecom operator reported a consolidated net loss of 9.48 bn rupees for Jan-Mar compared with a loss of 4.88 bn in the preceding quarter and a profit of 790 mn rupees a year ago. Revenue from operations fell 10.6% on quarter and 24.1% on year to 43.12 bn rupees due to "the impact of free offers, disruptive pricing and unprecedented competitive intensity in the industry". Operating expenses declined 0.4% on quarter and 5.3% on year to 58.16 bn rupees. The company suffered operating losses of 12.92 bln rupees during the quarter, compared with an operating loss of 1.6 bln rupees a year ago. "Steep declines in profitability and/or net losses have 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 company said, blaming the entry of 4G operator Reliance Jio for hyper competition. Reliance Communications has been hit hard as around 25% of its revenue used to come from users of its data dongles, which suffered due to the free data offers from Reliance Jio. "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," the company said. The company also said it expects to complete its merger with Sistema Shyam Teleservices Ltd, which operates MTS brand of telecom services, by June.