Reliance Communications’ balance sheet troubles, which have wiped off more than a third of its value this month, have thrown into sharp relief the squeeze afflicting India’s telecoms sector: fickle users, wafer-thin margins and crippling debt.
Reliance Communications, known as RCom, has seen its shares and bonds tumble since it reported weaker results over the weekend – along with a shrunken user base and higher debt. It said on Monday it was in talks with banks to defer loan repayments due over the next four months.
RCom, owned by billionaire Anil Ambani, is a relatively small player in an industry dominated by the likes of Bharti Airtel and Vodafone, and its financial position is considerably worse than its rivals.
But almost all India’s mobile operators posted a loss in the first quarter and the one exception, Bharti, recorded its smallest profit in four years.
Vodafone all but pulled out of the world’s second biggest mobile market earlier this year, merging its Indian business with Idea Cellular.
By Baishakhi Dutta
