Newcomer’s freebies hit Idea bottom line

13 Feb 2017

India’s embattled third-placed cellco Idea Cellular has registered a net loss of INR3.856 billion (USD57.6 million) for its fiscal Q3, ended 31 December 2016, noting in a press release that its wireless revenues were trending downwards for the first time, with the operator anticipating a decline in turnover of 3% to 5% for the full year. Idea attributed its difficulties to increased competitive pressures from newcomer Reliance Jio Infocomm (Jio), in particular the entrant’s free voice and data offerings, and added that ‘the sector can expect to recover revenues only once the new operator starts charging for its pan-India mobile services.’ Idea registered INR86.627 billion in revenue for the three-month period, down from INR93.002 billion in the preceding quarter, whilst EBITDA slipped 23.8% quarter-on-quarter to INR21.655 billion. Consequently, net earnings reversed from profit of INR900 million in Q2 to a loss of INR3.856 billion.

Idea was able to minimise the impact of Jio’s launch on its subscriber base by reducing its voice and data rates, and the operator registered a total of 185.2 million mobile subscribers as at 31 December, compared to 178.8 million three months earlier. The measures were unable to completely eliminate subscriber losses, however, and Idea registered its first-ever net loss of data users: at the end of December 2016 the cellco counted a total of 48.583 million mobile data users – including 24.485 million 3G data and 2.541 million 4G data subscribers – down from 54.063 million (of which, 27.630 million 3G and 3.073 million 4G) at end-September. Nevertheless, Idea continued to forge ahead with its network expansion, adding 9,009 new LTE sites to its network during the three-month period, as well as 6,194 new 3G sites.