Intense Competition Drags Reliance Communications Into The Red In Third Quarter 

Reliance Communications Ltd. on Saturday reported a net loss of Rs 531 crore in the October-December quarter compared to Rs 303-crore profit in the year-ago period.

Intense competition and a complete shutdown of profitable CDMA operations pulled its revenues 8 percent lower to Rs 4,820 crore in the third quarter of financial year 2016-17, the company said in a filing to stock exchanges.

Total expenses increased to Rs 4,881 crore in the reported quarter compared to Rs 4,475 crore in the same period the previous year, the filing said. Finance costs surged 37 percent to Rs 958 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 42.4 percent to Rs 1,106 crore, while EBITDA margin contracted by 1,240 basis points to 23 percent

Realisation per minute fell 10.5 percent to 40 paise quarter-on-quarter, while the average revenue per user was marginally down at Rs 154 for the quarter ended December.

The Anil Ambani-led company had 32 million data customers, including 23.4 customers using third generation (3G) or fourth generation (4G) services, it said in a press release.

Reliance Communications is one of the worst performers on the BSE Telecom index. Its stock price has fallen 38.4 percent in the last 12 months, while the BSE Telecom index gained 8.4 percent in the same period. Of the total 18 analysts tracked by Bloomberg, only one has a ‘buy’ rating on the stock.

Moody’s Investor Service had downgraded Reliance Communications’ (RCom) dollar-denominated debt mainly because of the uncertainty around the timing and completion of its announced restructuring. In 2016, the company had formed an alliance with Maxis Communications to consolidate the telecom services of RCom and Aircel, and had also signed a binding pact with Brookfield Group to sell its tower business for Rs 11,000 crore in an attempt to reduce its debt.