RCom calls for government action as losses widen - Mobile World Live

RCom calls for government action as losses widen

30 MAY 2017

Reliance Communications (RCom), the sixth largest operator in India, urged the government to take measures to improve the health of the telecoms industry, which is burdened by huge debt and facing intensified competition since the entry of 4G player Reliance Jio.

RCom, with a debt of INR440 billion ($679 million), reported a loss of INR12.85 billion in its fiscal year ending 31 March, its first ever annual loss. Its shares dropped 21 per cent yesterday, following a report by The Economic Times (ET) stating the company has fallen behind on its loan payments with more than ten local banks.

The operator plans to separate its wireless business and then merge it with Aircel, and is waiting for final clearance from regulators. In October 2016 it also agreed to sell a 51 per cent stake in its tower unit to Canada’s Brookfield Infrastructure Group for an upfront cash payment of $1.7 billion.

Gurdeep Singh, RCom co-CEO, said in an analyst call RCom advised its lenders it will make payments of INR250 billion from the proceeds of the two transactions by 30 September, ET reported.

Singh said the industry for the first time in 20 years is suffering declining revenue, which led to lower contributions to the government. He suggested the regulator change the method for calculating adjusted gross revenues in order to lower licence fees and spectrum usage charges, as well as abolish interconnect usage charges as the industry is moving away from per-minute and per-gigabyte billing.

The operator posted a net loss of INR9.66 billion in its fiscal Q4, compared with a profit of INR900 million a year earlier. It attributed the decline to Jio’s free offers and disruptive pricing model.

Singh said RCom paid the price for not following the market by introducing free unlimited voice for prepaid users, losing 3 million subscribers in fiscal Q4, ET reported.

Rivals Bharti Airtel and Idea Cellular also posted heavy losses in the January-March quarter.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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