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MTR cut delivers ‘body blow’ to Idea top line

24 Jan 2018

India’s third-largest wireless provider by subscribers, Idea Cellular, has recorded year-on-year declines of 24.9% and 44.2% in revenue and EBITDA respectively for the three months ended 31 December 2017, with the operator attributing the setback to a reduction in the mobile termination rate (MTR). Idea claims that the reduction in MTR from INR0.14 (USD0.00219) to INR0.06, which came into effect from 1 October last year, negatively impacted its turnover and EBITDA this quarter to the tune of INR8.2 billion and INR2.3 billion, respectively. The company’s total revenue for the period was INR65.1 billion, down from INR86.6 billion twelve months earlier, whilst EBITDA was down to INR12.2 billion from INR21.9 billion in December 2016. Idea described the MTR change and the planned 43% cut to international terminal charges (due to come into effect from 1 February 2018) as a ‘body blow to all operators’ that would also reduce investable funds for the government’s ‘Digital India’ programme. Idea’s consolidated net loss for the period was INR12.8 billion, widening from a loss of INR3.8 billion a year ago.

Idea’s subscriber base continued to grow, reaching 188.5 million at end-December 2017, from 182.4 million three months earlier and 185.2 million in December 2016, with 34.8 million users signing up to 3G or 4G plans – increasing from 29.1 million in September 2017 and 27.0 million in December 2016. Fierce price competition in the sector continued to drag down ARPU, however, with the cellco recording blended ARPU of INR114 for the period compared to INR157 a year earlier. Falling prices have led to an increase in consumption for both voice and data services, slowing the ARPU decline somewhat. For voice, average realisation per minute nearly halved y-o-y from INR0.407 to INR0.225, but average monthly minutes of use (MOU) per subscriber grew from 385 to 509 over the same period. Similarly, realisation per MB of data dropped to INR0.020 from INR0.159, but was partially offset by a spike in average monthly data consumption from 703MB to 4,742MB.

India, Vi (Vodafone Idea Limited, VIL)

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