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RCOM’s losses up 82% QoQ at Rs 966 crore in Q4FY17

Update: Anil Ambani-led Reliance Communication (RCOM) lost 3.7 million mobile Internet subscribers during the quarter ended March 2017 (Q4-FY17): the company reported 28.3 million mobile Internet connections for the quarter, down 13% Quarter-on-Quarter (QoQ) from 32 million connections in Q3-FY17. Note that RCOM had also lost 3.1 million mobile Internet subscribers in the previous quarter and another  3.8 million data connections in Q2-FY17 as the company switched off CDMA services.

3G+4G connections vs 2G connections

The company’s mobile broadband (3G + 4G) connections stood at 20.8 million this quarter, down 11% QoQ from 23.4 million mobile broadband connections in the previous quarter. Mobile broadband base accounted for 33.4% of RCOM’s overall mobile subscriber base which stood at 84.7 million during the quarter. RCOM had 7.5 million 2G connections in this quarter, down from 8.6 million in the previous quarter.

Decrease in Data usage

Total mobile data traffic generated on RCOM’s network was 79.55 billion MB during the quarter, down 15% QoQ from 104.8 billion MB in the previous quarter.
-Average revenue per user (ARPU) was Rs 141 in Q3FY17, down significantly from Rs 154 in the previous quarter.
-Revenue Per Minute (RPM) also decreased 13.7% QoQ to 34 paise during Q4FY17.
-Data usage per customer decreased to 880 MB from 931 MB per data customer in the preceding quarter.

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Earlier: RCOM has reported a net loss of Rs 966 crore for the quarter ended March 31st, 2017 (Q4FY17), which increased 81.9% from Rs 531 crore loss in the previous quarter.  In the same quarter last year, RCOM had reported a profit of Rs 90 crore. The company continues to bleed as it struggles to keep up with the hyper-competitive telecom industry which has moved from a tariff-led strategy to one of bundling (4G+unlimited calling). The impact of free offers has been severe on RCOM: the company said that FY17 is the only year to generate full-year losses since the telco’s inception. The company posted a net loss of Rs 1285 crore in FY17.

Total consolidated income stood at Rs 4524 crore for the quarter, a drop of 8.7% QoQ and down 32.1% YoY from Rs 5980 crore revenues in Q4FY16. India operations contributed about 86.5% of its overall revenue at Rs 3916 crore during the quarter. The rest came from RCOM’s global operations in the US, Middle East, Europe, and so on. Both Indian and global operations are running at losses: India operations suffered a loss of Rs 300 crore while global operations generated losses of Rs 10 crore during Q4FY17. Note that RCOM did not reveal subscribers numbers or usage metrics in this quarter; it had lost 3.1 million data connections last quarter. We will update this in case they do.

EBITDA stood at Rs 1083 crore during the quarter, down 10.2% from the previous quarter.  Indian operations’ revenues and EBITDA stood at Rs. 3,916 crore and Rs. 908 crore respectively; global revenues and EBITDA were Rs. 988 crore and Rs. 175 crore respectively.

RCOM’s deals & mergers

RCOM-SSTL: The merger between RCOM and Sistema Shyam, which owns the MTS brand in India, has received all necessary approvals, RCOM said and is expected to complete by June 2017.  “The merger will add highly valuable 30 MHz of 850 band spectrum in 8 key circles,” the company said.

RCOM’s wireless unit merger with Aircel: The company had signed a definitive deal in September last year for merging of its wireless business with Aircel Limited. The company said it received all necessary shareholders and regulatory approvals and is expecting to close the deal in the next few months. The combined entity will an estimated NPV (Net Present Value) of ~Rs. 20,000 crore, RCOM said.

Spectrum trading with Jio: RCOM is currently sharing spectrum with its competitor Jio under the 850 MHz band, and has been operational for over 6 months, the company said.

Download: Financials | Press Release

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