It's a precarious situation for Anil Ambani-owned Reliance Communications. On Monday, it announced fourth quarter results that suggest that things are not going fine for RCom. The company reported considerable drop in revenues and net profits, both annually and sequentially. For instance, RCom's revenues dipped 24 per cent to Rs 4,524 crore in January-to-March 2017 as compared to corresponding period last year. The company reported net loss of Rs 948 crore in last quarter as against net profits of Rs 79 crore in the same period last year.
RCom's core business, that is telecom services, is witnessing steady decline over the past few quarters. The last quarter was particular weak because it reported deterioration in both voice and data businesses. For instance, the number of voice subscribers shrunk to 84.7 million in fourth quarter of 2016/17 from 103.6 million in the same quarter last year. The voice ARPU (average revenues per user) fell from Rs 107 a year ago to Rs 87 now.
The onslaught by Reliance Jio has affected the voice revenues of all telecom operators, largely affecting their voice ARPUs, but in the case of RCom, it's even worse. The drop in Rcom's voice customers shows that people are switching from its network to other telcos. So far, the larger operators like Airtel, Vodafone India and Idea Cellular have kept their voice customer intact. RCom, on the other hand, have not been able to customers under its fold who are leaving in hordes, as the latest numbers suggest.
The telecom market is shifting from voice to data. While the average revenue realization per customer has dipped for most telcos, they have been able to increase their overall mobile broadband customer base. The rise in data traffic is making up for the fall in data ARPUs.However, that's not the case with RCom. It has registered decline in total data customers, total data traffic and data usage per customer. For instance, its total data customers fell from 38.9 million a year ago to 28.3 million in the last quarter. The total data traffic on its network dropped to 79,554 million megabits in the last quarter to 104,743 million megabits a year ago.
To make the matter worse, the telco is now staring at a possible crisis with its outstanding debt. The company's gross debt stood at Rs 45,733.4 crore as on March 2017. RCom has said that it's likely to retire about Rs 25,000 crore debt from the sale of its towers business to Brookfield and impending merger with Aircel. The lenders have turned cautious though, and categorised their exposure to RCom as special mention account.
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