Idea posts first full year loss in face of Jio offensive - May 2017

[Sudhakar]

Idea posts first full year loss in face of Jio offensive - May 2017

Bashed by a severe tariff war, telecom operator Idea Cellular today reported a consolidated loss of Rs 325.6 crore in the three-month period ended March 31, 2017.

The company had posted a profit of Rs 449.2 crore in the same period a year ago.

For Idea, this is the second consecutive consolidated loss in two back-to-back quarters as the company viewed the October-April period as particularly harsh and a 'period of telecom discontinuity'.

For the October-December 2016 quarter, Idea has posted its first-ever consolidated net loss of Rs 383.87 crore compared to a net profit of Rs 659.35 crore in the year-ago period.

"The Indian wireless industry witnessed an unprecedented disruption in the second half of financial year 2016-17 on account of free voice & mobile data promotions by the new entrant in the sector.

The October-April 2017 interval can be best described as Period of Telecom Discontinuity, permanently changing mobility business parameters," Idea Cellular said in a statement.

Reliance Jio made its disruptive entry into the Indian mobile market space in September last year by making voice calls and 4G data free as part of its promotional offer that continued till March this year.

Total revenues of the company declined by 13.7% at Rs 8,194.5 crore from Rs 9,500.7 crore it registered a year ago in the corresponding quarter.

Idea Cellular also posted its first-ever annual consolidated loss at Rs 404 crore for 2016-17 compared to a profit of Rs 2,174.2 crore in 2015-16.

Annual income of Idea Cellular declined marginally to Rs 35,882.7 crore at the end of 2016-17 from Rs 36,162.5 crore it reported at the end of the previos fiscal.

In an effort to retain its existing mobile subscribers, Idea said it was forced to reduce on sequential quarterly basis, its voice rate by 12.5% to 25.9 paise per minute compared to 29.6 paise in the previous quarter of 2016-17 as well as it dropped its mobile data rate by 27.6 per cent to 11.5 paise per megabyte compared to 15.9 paisa in the third quarter of 2016-17.

"However, the lure of free offerings by the new mobile operator resulted in lower than normal volume elasticity with sequential quarterly voice minutes growing by 10.3 per cent to 231.4 billion minutes versus 209.8 billion minutes in third quarter of financial year (FY) 2017," Idea said.

Idea Cellular also blamed tsunami of minutes terminating on Idea network from the new operator, resulting in overall higher ratio of incoming minutes recorded at below cost inteconnection usage charge rates" for fall in blended voice realisation rate.

The impact of free extended promotions was even more pronounced on mobile data business.

Idea witnessed a sequential quarterly decline of 6.4 million mobile data customers on the back of 5.5 million loss in October-December 2017 versus second quarter of FY 2017.

Its overall mobile data customer base receded to 42.2 million compared to 48.6 million in October-December 2017 period.

The 'non voice revenue' (including data) contribution to the 'overall service revenue' fell to 24.9 per cent as mobile data revenue contribution declined to 18.3 per cent.

"However, the company remains optimistic of revival of mobile data subscriber addition and data revenue in FY 2018 as wireless broadband prices become more affordable for higher adoption by the Indian masses across all socio-economic & geographic segments," Idea said.

Source : https://www.techgig.com/tech-news/Idea-posts-first-full-year-loss-in-face-of-Jio-offensive-107029