Intense competition to impact RJio’s profits

Intense competition to impact RJio’s profits

NEW DELHI: Mukesh Ambani-led Reliance Jio is facing intense competition from incumbent telecom operators, which may impact its profitability and returns, India Ratings and Research (Ind-Ra) said in a note.

The agency has also assigned Jio a Long-Term Issuer Rating of ‘IND AAA’ with a Stable Outlook. It also assigned Jio’s Rs 100 billion bank loan facilities an ‘IND AAA’ with a Stable Outlook and an ‘IND A1+’ rating.

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Ind-Ra said that the country’s telecom industry is exposed to intense competition, which is capital intensive in nature, and is subject to changes in technology and regulatory environment.

 The agency said that it has equated Jio’s ratings with those of its parent Reliance Industries Ltd in view of the strong strategic and moderate legal and operational linkages between the two entities. RIL has invested a significant proportion of capital in Jio.

At end-FY16, RIL had invested equity of Rs 447 billion into RJio and has recently proposed a rights issue of Rs 150bn in the form of 9% non-cumulative optionally convertible preference shares. Furthermore, both parent and subsidiary share a common name Reliance and Jio represents the group’s presence in the telecom business.

Source by gadgetsnow…
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