Reliance Communication shares tank 20% after weak Q4 results, increase in net debt

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Updated: May 29, 2017 5:05:46 PM

Shares of Reliance Communications Ltd nose dived 20 percent, triggering the lower circuit, to an all-time low of Rs 20.60 on the NSE before closing at Rs 20.80, down 19.22% from the previous close.

Shares of Reliance Communications Ltd nose dived 20 percent to an all-time low of Rs 20.60 on the NSE before closing at Rs 20.80, down 19.22% from the previous close. The company reported a consolidated net loss of Rs 948 crore for the quarter ended March 31, 2017. The company had posted a net profit of Rs 79 crore in the same quarter of the previous year.

A heavy debt load also weighed on the performance of Reliance Communications, which incidentally happens to be the most leveraged among listed Indian telecommunication carriers. The company’s net debt rose to Rs 44,345 crore at the end of the fourth fiscal quarter of the financial year 2017 versus Rs 42,803 crore at end of the third fiscal quarter.

The company, controlled by billionaire Anil Ambani, said on Saturday that it suffered a consolidated net loss of Rs. 966 crore in the fourth fiscal quarter of FY17, compared to a Rs. 90 crore net profit in the corresponding period a year earlier. Revenue from operations fell about 24 percent from a year earlier to Rs. 4,312 crore. The company said in a BSE filing that it incurred losses due to free offers, disruptive pricing and hyper competition prevailing in the telecom sector.

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The Economic Times newspaper on Monday reported that the company had delayed repayment of loans to more than 10 banks. In its quarterly results statement, however, Reliance Communications said that “pending formal confirmation by the lenders for waiver of certain loan covenants”, some loan amounts would continue to be classified as non-current liabilities.

Reliance Communications plans to repay Rs 25,000 crore worth of loans to its lenders with proceeds from its deals with Aircel and Canada’s Brookfield Infrastructure. The company expects lenders consent for sale of tower business and Aircel deal in the next few months. 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 10,000 crore. The company has also said that it aims to further cut debt by selling real estate in Delhi and Navi Mumbai.

The company’s operations include wireless telecommunications services, broadband access to enterprise customers, managed internet data centre services, and direct-to-home (DTH) business.

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