Reliance Communications (RCOM) has posted revenue of Rs 19,949 crore (–10.8 percent) and net loss of Rs 1,285 crore in fiscal 2017 against a net profit of Rs 660 crore in fiscal 2016.

Reliance Communications, a company promoted by Anil Ambani, indicated the promotional offers from Reliance Jio, the 4G venture promoted by younger brother Mukesh Ambani, had impacted the financial performance, resulting in first time full year loss since inception of the company.

For the first time in 20 years, the Indian telecom sector registered de-growth in revenues, leading to a reduction in the Government’s share in revenues, sharp drop in operating margins, accompanied by increased interest costs arising from debt burden, and higher depreciation and amortisation charges as a result of higher spectrum purchase costs.

Reliance Communications in Q4 FY 17

Reliance Communications recorded revenue of Rs 4,524 crore (–8.1 percent), EBITDA of Rs 1,083 crore (–10.2 percent) with EBITDA margin of 24 percent (–24.5 percent).

Reliance Communications has generated revenue of Rs 3,916 crore with EBITDA of Rs 908 crore from Indian operations. RCOM has generated global revenues of Rs 988 crore and EBITDA of Rs 175 crore.

Reliance Communications in FY 17

RCOM revenue was Rs 19,949 crore (–10.8 percent) due to free offers, disruptive pricing and competitive intensity in the Indian telecom industry.

The shutdown of RCOM’s CDMA operations during the first half of FY 17 impacted the full year revenue of the telecom operator.

The impact of moving to higher cost ICR arrangements in five telecom circles after the end of the validity period of 900 MHz spectrum held by the company has also impacted Reliance Communications revenue.

The merger with MTS is expected to be completed in June, 2017. The merger will add highly valuable 30 MHz of 850 band spectrum in 8 key circles, and will extend validity of spectrum in these circles for an additional period of 12 years, till 2033.

RCOM’s 850 MHz spectrum trading and sharing deal with Reliance Jio enabled the telecom operator to deliver LTE access to customers, with minimal Capex and lower operating costs.

The consolidation of RCOM’s wireless business with Aircel will have substantial benefits of Capex and Opex synergies with an estimated NPV of ~Rs 20,000 crore.