Idea Cellular loss widens to Rs 1,280 crore in Q3 FY18 on IUC cut

The telecom arm of the Aditya Birla group reported yet another weak quarterly result on Wednesday. Idea’s loss during the quarter widened to Rs 1,284.5 crore in Q3 FY18.

This was three times the amount of loss recorded in Q3 FY17. In the corresponding period of FY17, Idea’s net loss amounted to Rs 383.9 crore.

Consolidated revenue earned by the company during the quarter amounted to Rs 6,510 crore.

However total costs also increased to Rs 8,620 crore in the quarter ending December 31, 2017.

Shares of the company dropped 5.15 points or 5.18% to Rs 94.25 apiece at 1238 hours on BSE Sensex.

Idea Cellular attributed this loss to the cut of IUC charges levied by TRAI. The telecom regulator had cut interconnect usage charges to 6 paise per minute from the earlier 14 paise.

“Effective 1st October 2017, TRAI amended the domestic Interconnection Usage Charge (IUC) settlement regulation reducing the ‘Mobile Termination Charge’ (MTC) from 14 paisa to 6 paisa per minute aggravating the financial stress of the industry. Therefore, this quarter results are not comparable to the earlier periods. The regulation imposed 57% sharp decline in IUC settlement rates negatively impacted Idea’s Revenue and EBITDA for this quarter by ~Rs 8,200 million (Rs 820 crore) and Rs 2,300 million (Rs 230 crore) respectively,” said Idea in its BSE filing.

On international IUC rate drop, the company said this would mean a 'bodys blow' to the industry. "The new domestic MTC rate and recently announced drop in 'International mobile termination' settlement charges effective 1st February, 2018 from 53 paisa to 30 paisa per minute, remains a body blow to all operators and reduces investable funds for the critical 'Digital India' program."

Idea claimed that its overall subscriber base crossed the 20 crore milestone on 31st December. Its customer count stood at 20.3 crore at the end of December. However ARPU still suffered due to consumers 'migrating to unlimied voice bundled data plans,' which the company said has resulted in 12.8% decline in Idea's gross revenue in the quarter.

Net debt of the company as on December 31, 2017 amounted to Rs 55,780 crore.

However Idea was hopeful for the coming quarters as ‘new competitive dynamics unfolding should have positive effect’. The company said that users were now consolidating their usage to single operators and casual mobile customers started adopting attractive high bundled plans.

Idea labelled the growth of data usage on its network as ‘meteoric’.

“Today we are witnessing a meteoric growth in data usage per data subscriber which has zoomed from 703 MB/month (Q3FY17) to monthly usage of 4,742 MB during this quarter,” the company added.

The company also commented on its impending merger with Vodafone and said it would come to a close in the first half of this calendar year 2018.