Shares in Reliance Communications dropped as much as 10 per cent on Thursday, after India's third largest mobile phone carrier by customers reported a second consecutive quarter of profit declines on Wednesday.
Consolidated net profit at the carrier, controlled by billionaire Anil Ambani, fell a sharper-than-expected 44 per cent on account of higher finance costs.
RCom shares closed 9 per cent lower at Rs 80 on the National Stock Exchange, underperforming the broader Nifty, which declined 0.6 per cent to 6,019. Other telecom stocks such as Bharti Airtel and Idea also fell sharply on profit taking. Bharti ended 1.7 per cent lower while Idea Cellular declined 3.8 per cent.
The sharp selloff in the stock has wiped Rs 1,650 crore from RCom's market value.
Consolidated net profit at the carrier, controlled by billionaire Anil Ambani, fell to Rs. 105 crore for the third quarter of the fiscal year, from Rs. 186 crore reported a year earlier.
Gurdeep Singh, chief executive of Reliance Communications' wireless business, attributed the bigger-than-expected profit fall to a jump in interest costs as the company last year refinanced foreign currency convertible bonds (FCCBs) of $1.18 billion through loans from a clutch of Chinese banks.
Reliance Communications' net debt of about $6.9 billion (close to Rs 35,000 crore) as of December, or more than five times its annualised operating profit, makes it the most-leveraged Indian phone carrier. The company has so far had little success in its efforts to raise funds via stake sales in its units.
A planned sale of its telecommunication tower unit that had been expected to raise about $3 billion has dragged on for more than two years.
In July, it was forced to shelve a Singapore public offering of its undersea cable unit due to weak investor demand and has said it will attempt again to list the unit.
Tower arm in advanced talks:
RCom's telecommunications tower arm is in "advanced" stages of discussions with three carriers for "a large" infrastructure sharing deal, a senior company executive told analysts on a conference call. Gurdeep Singh, chief executive of Reliance Communications' wireless business, did not give any further detail.
Singh said it was "premature" to comment on contours of any potential deal, when asked if the company was open to lease out its towers to Reliance Industries at a discount to market price.
Reliance Industries, controlled by India's richest man Mukesh Ambani, holds 4G permits for all of India, and has long been expected to take Reliance Communications towers on rent to roll out high-speed Internet services.
(With inputs from Reuters)