Reliance Communications hit by mobile price war

Jio’s free services forced competitors to reduce plan tariffs

Indian mobile phone network operator Reliance Communications Ltd. posted its second straight quarterly loss, hit by the price war which has broken out in the world’s second-biggest mobile market by number of users.

The introduction last year of rival Reliance Industries’ new Jio 4G broadband service with free voice and data services has forced other networks to come up with cheaper plans of their own, squeezing margins and in some cases dragging down sales, with bigger rivals Bharti Airtel, Idea Cellular and Vodafone India also suffering from the cut-price competition.

Reliance Communications, controlled by billionaire Anil Ambani, said it made a consolidated net loss of ₹9.66 billion ($149.8 million) for its fiscal fourth quarter to March 31, compared with a ₹900 million net profit in the same period a year earlier.

Four analysts had, on average, expected Reliance Communications to report a loss of ₹7.48 billion, according to data compiled by Thomson Reuters.

Revenue from operations fell about 24% from a year earlier to ₹43.12 billion.

Its heavy debt load — ₹428 billion of net debt as on Dec. 31 — has also weighed on the performance of Reliance Communications, which is the most leveraged among listed Indian telecommunication carriers.

The latest debt figure as of end-March was not immediately available. But finance costs rose 24.3% from a year earlier to ₹9.83 billion, the company said.

The company expects its debt to fall by about ₹250 billion this financial year.