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Idea reports first annual net loss since 2007

15 May 2017

India’s third largest cellco by subscribers, Idea Cellular, has reported a 14.3% year-on-year decline in turnover for its fiscal fourth quarter ended 31 March 2017, citing the ‘unprecedented disruption’ in the second half of the year caused by new entrant Reliance Jio Infocomm’s (Jio’s) free voice and data promotions. Idea booked turnover of INR81.3 billion (USD1.3 billion) for the three-month period, down from INR94.8 billion a year earlier and INR86.6 billion in the period ended 31 December 2016. In an effort to retain its subscribers, Idea notes that it was forced to reduce its voice rates by 12.5% on quarter-on-quarter basis from INR0.296 per minute to INR0.259 whilst data rates were slashed from INR0.159 per MB to INR0.115 over the same period. As a consequence, data usage increased from an average 703MB per user in Q3 FY16/17 to 957MB, but data ARPU was flat at INR110 (INR111 in the preceding quarter). Idea registered an increase in its subscriber base, adding 4.3 million net new users, bringing the total to 189.5 million but the number of data users (including 2G, 3G and 4G) dropped by 6.4 million q-o-q to 42.2 million.

EBITDA, meanwhile, recovered to INR22.0 billion, having fallen from INR33.3 billion in Q4 FY15/16 to INR21.7 billion in Q3 FY16/17. Similarly, Idea’s net loss for the period improved slightly to INR3.3 billion from INR3.9 billion in Q3. The impact of Jio’s launch, however, drove Idea to an overall net loss of INR4.0 billion for the full year ended 31 March 2017, compared to a profit of INR27.1 billion in the previous year – its first annual loss in eleven years.

India, Vi (Vodafone Idea Limited, VIL)

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