Idea Cellular on Saturday posted a net loss of Rs 327.70 crore for the fourth quarter which ended on March 31, as compared to a net profit of Rs 451.7 crore in an year earlier period, impacted by Reliance Jio’s free services, which sparked a brutal price war in the world’s second-biggest mobile phone market.
The Aditya Birla Group-owned company’s posted revenue of Rs 8194.5 crore in the quarter, down from Rs 9500 crore in a year earlier period.
“The Indian wireless industry witnessed an unprecedented disruption in the second half of the financial year 2016-17 (FY17) on account of free voice & mobile data promotions by the new entrant in the sector. The October to April 2017 interval can be best described as ‘Period of Telecom Discontinuity’, permanently changing mobility business parameters. Consequently, the revenue KPIs & financial parameters for all mobile operators have sharply declined in H2FY17,” the telecom operator said in a statement.
Idea said that for the first time in its history, the flourishing Indian Mobility industry is trending towards an annual revenue decline of ~2% in FY17 (vs. FY16).
“With the new entrant starting to charge for its services, albeit very slowly, the sector is expected to return to growth in the next financial year,” it added.
As a result of this current industry upheaval, the standalone Idea revenue dropped to an unforeseen level in the quarter at Rs. 81,261 million, a sequential quarterly decline of 6.2% on the back of 6.9% decline in the third quarter.
In an effort to retain its existing mobile subscribers, Idea said that it was forced to reduce on sequential quarterly basis in Q4FY17, its voice rate by 12.5% to 25.9 paisa/min (vs. 29.6 paisa in Q3FY17) as also steeply drop its mobile data rate (ARMB) by 27.6% to 11.5 paisa/MB (vs. 15.9 paisa 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 (vs. 209.8 billion minutes in Q3FY17),” the telco said.
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 the overall higher ratio of incoming minutes recorded at below cost IUC rates, it said.