Anil Ambani led Reliance Communications seems to be one of the biggest casualty of Jio’s freebies. After RCOM posted a third quarterly dip in its subscriber base and revenues in Q4FY17, it put out a statement to investors and lenders promising them to repay around Rs 25,000 crore in unsettled debt by 30th September 2017 after its two business deals—Aircel merger and Brookfield tower sale—gets completed. “The said amount will cover not only all scheduled repayments, but also include substantial pre-payments to all lenders,” RCOM said.

The company’s net debt stood at Rs 44,345.3 crore as of Q4FY17, which is an increase of 3.4% when compared to Rs 42,802.5 crore debt in Q4FY16. RCOM’s merger with Aircel’s wireless business unit which was signed in September last year will help the company reduce debt by Rs 14,000 crore, while its tower sale deal with asset management company Brookfield will additionally contribute to Rs 11,000 crore in debt reduction. However, RCOM is yet to receive approval from lenders on theses proposed transactions.

Note that RCOM also has two other important deals which will help its fetch more spectrum and reach.  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 company is also sharing spectrum with its competitor Jio under the 850 MHz band; this went live 6 months ago.

Share prices drop, credit firms downgrade position on RCOM

Apart from this, RCOM’s share prices hit a new low: On the NSE, the company’s share prices dipped to Rs 18.65 per share (at 10:30 AM IST), which is the biggest drop since its inception. Prior to Jio’s entry in September last year, the company shares used to trade at high of Rs 91.8 per share; the lowest trading rate was only Rs 32.6 in the same year, as pointed by Moneycontrol.

Subsequently, credit rating firms including Moody’s, Credit Analysis & Research Limited (CARE) and India’s ICRA have downgraded RCOM’s credit outlook today. “The reasons for these revisions include RCOM’s weak operating performance, high leverage, the weak internal cash flow generation against sizeable debt servicing obligations and delays in debt servicing by the company,” RCOM said in a statement.

Financials

For the quarter ended March 31st 2017 (Q4FY17) RCOM reported:
-Losses of Rs 966 crore, up 81.9% from Rs 531 crore loss in the previous quarter.
– Total consolidated income of Rs 4524 crore, a drop of 8.7% QoQ and down 32.1% YoY.
– India operations contributed about 86.5% of its overall revenue at Rs 3916 crore during the quarter.
– Indian operations’ revenues and EBITDA stood at Rs. 3,916 crore and Rs. 908 crore respectively

Metrics

-RCOM lost more than 10 million connections during the FY17, post launch of Jio and due to the company’s CDMA shutdown (Q4:3.7 million| Q3:3.1 million| Q2: 3.8 million).
– Mobile broadband (3G + 4G) connections stood at 20.8 million this quarter, down 11% QoQ.
– 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.