Seems the new entrant in the Indian telecom sector with its free data and voice offer has seriously affected the revenue of other telcos. Soon after the market leader, Airtel reported a massive drop in its net profit, India’s third largest telecom operator Idea Cellular has posted its first ever consolidated net loss since its IPO in 2007. For the quarter ended December 31, the operator posted a consolidated net loss of Rs 383.87 crore. That against a net profit of Rs 655.6 crore a year ago period and Rs 90 crore in the previous quarter.
Idea’s revenue declined to Rs Rs 86,627 million or around 3.7 percent, that’s a decline of 6.9 percent on the sequential quarterly basis. The standalone EBITDA (Earnings before interest, tax, depreciation and amortisation) fell to Rs 21,655 million, a steep drop of 23.8 percent.
“The Indian mobile industry witnessed an unprecedented disruption in the quarter of October to December 2016, primarily due to free voice & mobile data promotions by the new entrant in the sector, ” said the operator in a statement.
Wel, who to blame? Reliance Jio, the Mukesh Ambani-led telecom firm who started its commercial operation back in September 2016. The new entrant in the Indian telecom operator is currently pushing its free voice and data offer to the masses and still has not started charging its customers.
Highlights from the Idea earning
- Idea reduced its voice rates by 10.6 percent to 29.6 paise per minute (vs 33.1 paise in Q2FY17). The operator also dropped its mobile data rates (ARMB) by 15.2 percent to 15.9 paise per megabyte (vs 18.7 paise in Q2FY17).
- Quarterly sequential voice minutes grow only by 7.3 percent to 210 billion minutes (vs. 195.5 billion minutes in Q2FY17).
- The decline of 5.5 million mobile data customers on a sequential quarter basis with overall mobile data subscriber (2G+3G+4G) base receding to 48.6 million (vs 54.1 million in Q2FY17).
- Overall Idea mobile data volume grew only by 1.3% (vs Q2FY17) to 108.8 billion megabytes. Whereas the per subscriber data usage grew marginally to 703 megabytes against 694 megabytes in Q2FY17.
- The ‘Non-Voice Revenue’ (including mobile data) contribution to the overall service revenue fell to 27.2 percent.
- Idea Cellular reported an addition of 5.6 million new customers to its network.
- The net debt as on 31st December 2016 stands at Rs. 491.4 billion.
- The operator is gearing to offer ‘Pan India wireless broadband services (3G and/or 4G) by March/April 2017’ in all 22 telecom service areas from existing 17 service areas.
If you have missed, Idea Cellular is in talk with Vodafone for a potential merger. It is expected to be an all-share deal, that would create a new telecom leader in Indian telecom space. The combined telecom operator will have around 390 million subscribers, way ahead of current market leader Airtel’s 266 million subscribers.