Reliance Communications hit by Indian mobile price war

Indian mobile phone network operator Reliance Communications Ltd posted its second straight quarterly loss on Saturday, hit by the price war which has broken out in the world’s second-biggest mobile market by number of users.

The launch last year of rival Reliance Industries’ new Jio 4G broadband service with free voice and data services has forced other networks to come up with cheaper plans of their own, squeezing margins and in some cases dragging down sales, with bigger rivals Bharti Airtel, Idea Cellular and Vodafone India also suffering from the cutprice competition.

Reliance Communications, controlled by billionaire Anil Ambani, said on Saturday it made a consolidated net loss of Rs.9.66 billion (US $ 149.8 million) for its fiscal fourth quarter to March 31, compared with a Rs.900 million net profit in the same period a year earlier.

Four analysts had, on average, expected Reliance Communications to report a loss of Rs.7.48 billion, according to data compiled by Thomson Reuters.

Revenue from operations fell about 24 percent from a year earlier to Rs.43.12 billion. Its heavy debt load - Rs.428 billion of net debt as on December 31 - has also weighed on the performance of Reliance Communications, which is the most leveraged among listed Indian telecommunication carriers.

The latest debt figure as of end-march was not immediately available. But finance costs rose 24.3 percent from a year earlier to Rs.9.83 billion, the company said.

Worries over its debt-servicing ability hit its shares and bonds this week. To strengthen the business Reliance Communications is merging its wireless business with rival Aircel and is also selling a 51 percent stake in its radio masts business to Canada’s Brookfield Infrastructure Group for Rs.100 billion (US $ 1.54 billion).

The company expects its debt to fall by about Rs.250 billion this financial year after the completion of the deals, it said in Saturday’s statement.