1. Reliance Jio impact: Idea reports Rs 328-cr loss in January-March quarter

Reliance Jio impact: Idea reports Rs 328-cr loss in January-March quarter

Reeling under the impact of free services by Reliance Jio, the country’s third-largest mobile operator Idea Cellular on Saturday posted a less-than-estimated loss during the January-March quarter due to a tax writeback of Rs 379.2 crore.

By: | New Delhi | Published: May 14, 2017 4:52 AM
In a bid to blunt the force of Jio’s free offers, Idea, like other telecom operators, adopted the strategy of offering more data at lower prices and bundling it with free voice in some package.

Reeling under the impact of free services by Reliance Jio, the country’s third-largest mobile operator Idea Cellular on Saturday posted a less-than-estimated loss during the January-March quarter due to a tax writeback of Rs 379.2 crore. The company’s consolidated net loss narrowed to Rs 328 crore against a net loss of Rs 384 crore in the preceding quarter. A Bloomberg consensus estimate of 15 analysts had expected the company to report a loss of Rs 719.5 crore during the quarter.

This is the second consecutive quarter in which Idea has reported losses. During the October-December quarter, it posted a net loss for the first time since its listing in 2007.Revenues during the period declined 6.2% sequentially to Rs 8,126 crore. Its earnings before interest, taxes, depreciation and amortisation (Ebitda) during the quarter, similarly, at Rs 2,196 crore, came in significantly higher than the estimated Rs 1,920 crore.

Without naming Reliance Jio, the company said, “The Indian wireless industry witnessed an unprecedented disruption in the second half of fiscal year 2017 on account of free voice and mobile data promotions by the new entrant in the sector.” It, however, added that with Jio starting to charge for its services, growth is expected to come back in the current financial year, albeit very slowly.

Idea, like Bharti Airtel, has approached the Telecom Disputes Settlement and Appellate Tribunal, where it has challenged Telecom Regulatory Authority of India’s passive approach towards Jio’s free services, which, it contends, is not allowed under regulations.

In a bid to blunt the force of Jio’s free offers, Idea, like other telecom operators, adopted the strategy of offering more data at lower prices and bundling it with free voice in some packages, which led to a decline in its voice and data realisation.

“In an effort to retain its existing mobile subscribers, Idea was forced to reduce on sequential quarterly basis in Q4FY17, its voice rate by 12.5% to 25.9 paise/min (versus 29.6 paise in Q3FY17) as also steeply drop its mobile data rate (ARMB) by 27.6% to 11.5 paise/MB (vs 15.9 paise in Q3FY17).

However, the lure of free offerings by the new mobile operator resulted in lower than normal volume elasticity with sequential quarterly voice minutes growing by 10.3% to 231.4 billion minutes (versus 209.8 billion minutes in Q3FY17). The higher blended voice realisation rate fall was also an outcome of the tsunami of minutes terminating on Idea network from the new operator, resulting in overall higher ratio of incoming minutes recorded at below cost IUC rates,” the company said in a statement. Mobile data customers fell for the second consecutive quarter.

It witnessed a sequential decline of 6.4 million mobile data customers and overall mobile data customer base receded to 42.2 million (versus 48.6 million in Q3FY17). Contribution of non-voice revenue, which includes mobile data, to the overall service revenue fell to 24.9% (versus 27.2% in Q3 FY17), as mobile data revenue contribution declined to 18.3% (versus 20.2% in Q3 FY17).

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“The capex guidance for FY18 is Rs 6,000 crore, an investment earmarked for expanding broadband coverage, increase wireless data capacity with planned launch of 2300 MHz spectrum network and introduction of LTE voice services etc,” Idea said.

  1. P
    Parvez khalpe
    May 15, 2017 at 12:36 am
    Need to improve jio range in pune sihagad tower doodarshan campus area tourist point but their is not range on this area only bsnl idea & Vodafone we about 500 customer of jio very suffer from jio range kindly arrange best service like pune city we are waiting your best service .
    Reply
    1. K
      KEERTI VASHISHAT
      May 14, 2017 at 5:49 pm
      I feel that the Telecom companies are themselves responsible for the losses. Many people have shifted to JIO because their complaints were not redressed by these companies. There was no platform to make a complaint against any company. Many companies like AIRTEL ,were behaving like a Mafia Don , these were looting the customers by charging for the services that were never demanded. Once the data pack was over the rates for data jumped to 100 times the normal rates. THE CUSTOMER WANTS ONE PACK FOR ALL THE SERVICES. JIO has entered the market after a thorough research. It will definitely succeed if it's policies remain HONEST.
      Reply
      1. K
        Kuldeep Gupta
        May 14, 2017 at 2:07 pm
        Jio is Certainly a disrupter but its not good for the industry. When prices fall down and organisations incur losses, job cuts, low growth and unemployment takes over everything. Can you imagine wheat flour sel @ free in today's times?
        Reply
        1. R
          Ravindra Singh
          May 14, 2017 at 7:33 pm
          Right dear , many companies are cutting down man power.
          Reply
        2. H
          H s suri
          May 14, 2017 at 7:08 am
          I feel as per my observation now a days idea is not taking care to strengthen net signal huge problem in connecting. Cc team also not taking care of complaints. Where Jio has improved a lot. No use offering data if customer can not use. Customer needs both max data max use
          Reply

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