The launch last year of rival Reliance Industries' new Jio 4G service with free voice and data services has forced other networks to come up with cheaper plans of their own.
Reliance Communications shares fell as much as 20 per cent to an all-time low on Monday, after it reported a Rs. 966 crore fourth-quarter loss and worries about its heavy debt load resurfaced. The company, controlled by billionaire Anil Ambani, over the weekend posted its second straight quarterly loss, dragged down by a price war in what is the world's second-biggest mobile market by number of users. The Economic Times newspaper on Monday reported that the company had delayed repayment of loans to more than 10 banks. Reliance Communications declined to comment on the Economic Times report.
The launch last year of rival Reliance Industries' new Jio 4G 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.
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. The company 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 newspaper cited a company spokesperson as saying.
Reliance Communications is merging its wireless business with rival Aircel, and is also selling a 51 per cent stake in its tower business to Canada's Brookfield Infrastructure Group for Rs. 10,000 crore. Following a sell-off last week due to debt concerns, shares in Reliance Communications plunged further on Monday, falling to their maximum daily limit and hitting a record low of Rs. 20.60. They were down 13 per cent in early noon trade. A sell-off in its 2020 bonds also resumed on Monday with yields spiking to 17.2 percent after ending at 12.3 percent last week.
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