Idea Cellular posts Q3 loss of Rs384 crore as Reliance Jio disrupts sector
Idea Cellular posts its first quarterly loss due to increased rivalry in the telecom sector after Reliance Jio’s entry
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New Delhi: Mumbai-based telecom service provider Idea Cellular Ltd on Saturday said it has registered first quarterly loss due to increased rivalry in the sector that impacted its revenues.
Idea reported a net loss of Rs384 crore during the quarter ended 31 December as against a net profit of Rs660 crore in the year-ago period. Revenues declined 3.7% to Rs8,661 crore. Earnings before interest, taxes, depreciation and amortisation (Ebitda) declined 24.4% to Rs2,165.5 crore.
“The unprecedented disruption in the Indian mobile industry, primarily due to free voice, mobile data promotions, and the lure by the new entrant in the sector has adversely impacted performance,” an Idea spokesperson said, adding that revenue KPIs and financial parameters for all mobile operators have sharply declined, and for the first time in its history the flourishing Indian wireless sector is trending towards an annual revenue decline of 3 to 5% in FY2017 (vs FY16).
“The sector can expect to recover revenues only once the new operator starts charging for its pan India mobile services. Please review Idea’s performance in the light of these happenings,” the spokesperson said.
To be sure, Idea and Vodafone India are in merger talks. The proposed merger will create the nation’s largest telecom firm with combined revenue of Rs78,000 crore and a 43% share of the market hitherto dominated by Bharti Airtel Ltd, which reported annual revenue of Rs50,008 crore from local telecom operations in the last financial year.
The consolidation has been triggered by the entry of Reliance Jio Infocomm Ltd, in which parent Reliance Industries Ltd has invested a staggering $25 billion.
Since the launch of its services in September, Jio has offered free voice and data and signed up more than 72 million users, forcing rivals, including Vodafone India and Idea, to slash tariffs in response.