Idea Cellular shares fell over 8 per cent on Monday after the company announced its fourth quarter results on Saturday and posted a consolidated loss of Rs 325.6 crore in the three-month period ended March 31, 2017 as compared to a profit of Rs 449.2 crore in the same period a year ago. Idea Cellular said that the company’s poor performance was due to Reliance Jio’e entry into the telecom sector. Reliance Jio made its disruptive entry into the Indian mobile market space in September last year by making voice calls and 4G data free as part of its promotional offer that continued till March this year.
At 1.46 pm, Idea Cellular was trading 7.80 per cent down at Rs 85.10. The share price opened at Rs 91.30 and touched a high and low of Rs 93.25 and Rs 84.65, respectively, in trade so far. Later, stocks of the company closed 6.99 per cent down at Rs 85.85.
Bharti Airtel which announced its fourth quarter results last week also said that it was hit hard by Reliance Jio. Its net profit saw a sharp fall of 26 per cent on a sequential basis to Rs 373 crore, while total revenues were down 6 per cent at Rs 21,935 crore. Its Ebitda was down 6.7 per cent sequentially at Rs 7,993 crore while margins declined to 36.4 per cent from 36.7 per cent in the preceding quarter.
For Idea, this is the second consecutive consolidated loss in two back-to-back quarters as the company viewed the October-April period as particularly harsh and a ‘period of telecom discontinuity’. For the October-December 2016 quarter, Idea has posted its first-ever consolidated net loss of Rs 383.87 crore compared to a net profit of Rs 659.35 crore in the year-ago period.
Idea Cellular said, “The Indian wireless industry witnessed an unprecedented disruption in the second half of financial year 2016-17 on account of free voice & mobile data promotions by the new entrant in the sector.”
The free services offered by Reliance Jio has triggered a price war in the sector, hitting margins and sparking consolidation.