Reliance Jio Effect: Reliance Communications Reports Net Loss as Competition Increases

Anil Ambani-led Reliance Communications on Saturday reported consolidated net loss of Rs. 531 crores for October-December 2016, mainly due to free 4G services being offered by his elder brother Mukesh Ambani's Reliance Jio.

Reliance Communications had posted net profit of Rs. 303 crores in the same period a year ago.

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"The company suffered a net loss of Rs. 531 crores during the quarter primarily on account of... unprecedented competitive intensity. This was the first full quarter after the company's complete shutdown of its profitable CDMA operations," RCom said in a statement.

Reliance Jio launched its full-fledged free 4G service on September 5.

RCom added that there was an increase in amortisation and interest expense aggregating Rs. 278 crores on account of capitalisation of 850MHz spectrum liberalisation fee, which too adversely impacted its financials.

The consolidated revenue of RCom fell 11 percent to Rs. 4,822 crores in the reported quarter, from Rs 5,420 crores in the corresponding period of the previous fiscal.

RCom reported decline of 10.5 percent in revenue realisation from voice calls despite minutes of usage going up on its network by 4.3 percent to 102.1 billion minutes compared with the previous quarter.

RCom reported a decline of 0.6 percent average revenue per user to Rs. 154 and drop of 10 percent in data traffic on its network as against the previous quarter.

The stock closed at Rs. 34.6, down 2.26 percent from its previous close, on BSE on Friday.