Idea Cellular reports Q2 net loss at Rs1,107 crore
New Delhi: Idea Cellular on Monday posted a loss of Rs1,106.80 crore for the second quarter of the current fiscal, saying that the business was hit by pricing pressure and the goods and services tax (GST) introduction in a “challenging” operating environment.
The company—which is headed for a merger with Vodafone India—had reported a net profit of Rs91.5 crore in the July-September quarter of the last fiscal.
“The operating environment for Indian mobile operators remained challenging with unrelenting pressure on pricing, introduction of goods and services tax at 18% (compared to service tax at 15%) and need for large investments to support the exploding data demand,” Idea said in a statement.
Although “seasonal industry slowdown” is in sync with the past trends, the September quarter impact on the company’s subscribers and revenue loss was more pronounced as always given its higher share of rural subscribers, Idea said.
Its revenue from operations fell by 19.72% to Rs7,465.5 crore in the July-September quarter of the current fiscal, from Rs9,300.3 crore in the year-ago period. Shares of Idea were trading 2.78% down to Rs94.35 a piece on BSE.
The company said its while broadband data usage nearly doubled, the rate realisation “continued its free fall” during the three months ended September. The voice realisation rate fell by 9.9% over the June quarter, and mobile data realisation fell more sharply by 49.2%.
The revenue per subscriber also fell by 6.6% to Rs132 as against Rs141 in June quarter. Idea’s sequential quarterly voice minutes grew by 1.7% to 255 billion minutes (against decline of 1.9% in Q2FY17) and mobile data volume saw strong sequential growth of 73.5%.
The company is “on course” to introducing Voice over Long-Term Evolution (VoLTE)—a standard for speedy wireless communication—by early 2018, the statement added.
Idea and Vodafone India have recently entered into active infrastructure sharing arrangement, to avoid duplication of spends and make best use of capex (capital expenditure), the statement added.
The earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter declined nearly 20% to Rs1,501.6 crore hit by lower revenue and higher operating cost related to ‘roaming and access’ (as outgoing minutes increased) and as also annual increments.
Besides, the ‘depreciation and amortisation’ charge increased to Rs2,114.3 crore and ‘interest and financing cost rose to Rs1,182.9 crore as the company continued to aggressively invest in expanding its 4G footprint, the statement added.
Idea’s net debt as on 30 September 2017 was Rs54,100 crore, including a large component of ‘deferred payment obligation’ for spectrum acquired in auctions. Idea said its merger plans with Vodafone India is on track and the final petition for approval of scheme of arrangement has been filed with the National Company Law Tribunal (NCLT).
The approval of shareholders and creditors for the merger has already been taken following a meeting organised by Idea under NCLT’s supervision in October, it noted. Idea and Vodafone have also decided to sell their standalone tower business in India to ATC Telecom Infra for Rs7,850 crore.
Idea will get Rs4,000 crore (and Vodafone Rs3,850 crore) from the tower deal if sale completion precedes telcos’ merger. “On completion of Idea and Vodafone India merger, 6300 co-located tenancies on the combined standalone tower businesses will be merged into single tenancy, within a staggered period of two years, without a penalty fee,” the Idea statement added.
The established telecom operators have seen locked in a fierce tariff war to protect their turf, following the entry of aggressive newcomer Reliance Jio in the market. The incumbent operators have blamed competitive pressures triggered by the free and disruptive offers of Jio, for the financial stress in the sector.
India’s telecom company Bharti Airtel posted 76.5% fall in consolidated net profit to Rs343 crore for the September quarter. Last week, Reliance Communications reported a consolidated loss of Rs2,709 crore in the second quarter ended 30 September 2017, marking the fourth straight quarter of loss for the debt-laden company.
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