Disruption from RJio, Idea Cellular reports net loss of Rs 386 crore in Q3

Idea Cellular reported consolidated net loss of Rs 385.5 crore in its third quarter ended December 31, 2016, stating free voice and mobile data promotions of Mukesh Ambani's Reliance Jio as main reason. 

The company reported net loss of Rs 385.5 crore, compared to net profit of Rs 655.5 crore in the corresponding period of the previous year. 

In previous quarter (Q2FY17), Idea reported net profit of Rs 91.4 crore. 

Idea Cellular said, “The Indian mobile industry witnessed an unprecedented disruption in the quarter to October to December 2016, primarily due to free voice and mobile data promotions by the new entrant in the sector

Consolidated total income from operations stood at Rs 8662.7 crore, down by 3.79% year-on-year (YoY) and 6.85% quarter-on-quarter(QoQ). 

On standalone front, Idea reported net loss of Rs 492.2 crore. Operating profit stood at Rs 2165.5 crore and margins at 25%. 

Idea added, "Consequently 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% - 5% in FY17 compared to FY16.”

To retain its existing mobile subscribers, Idea was forced to reduce its voice rates by 10.6% to 29.6 paise per minute versus 33.1 paise in Q2FY17, and mobile data rates (ARMB) by 15.2% to 15.9 paisa per megabyte against 18.7 paisa in Q2FY17.

Despite revision in voice rates, Idea said, "The lure of free offerings resulted in lower than normal volume elasticity with the quarterly sequential voice minutes growing only by 7.3% to 210 billion minutes compated to 195.5 billion minutes in Q2FY17, that too led by double digit growth in incoming call volume."

Going ahead, Idea said, "Impact of free promotions was even more pronounced on mobile data business. The company, witnessed a decline of 5.5 million mobile data customers on quarter basis with overall mobile data subscriber (2G+3G+4G) base receding to 48.6 million versus 54.1 million of Q2FY17.

While, Idea's mobile data volume grew by 1.3% to 108.8 billion megabyte, though per subscriber data usage grew marginally to 703 megabyte against 694 megabyte in Q2FY17.

Consequently, the ARPU per data subscriber fell to Rs 111 against Rs 130 in Q2FY17.

Meanwhile in Q3,  Idea added a healthy 5.6 million new customer on Visitor Location Register (VLR) taking the VLR subscriber EoP base to 192.1 million as on december 31, 2016.

As on December 31, 2016, Idea's net debt stood at Rs 49,140 crore, a larger portion of this debt is from Department of Telecom (DoT) for spectrum acquired in last four spectrum auctions. 

Overall, Idea said “Inspite short term challenges, it remains committed to the process of building world class mobile broadband services.

The company is aggressively participating in the Digital India mission and is gearing to offer 'PAN India wireless broadband services involving 3G and 4G between March - April 2017.