Idea Cellular posts sixth straight quarterly loss in Q4 at Rs 9.6 bn

Idea Cellular, the country’s third largest telecom operator by subscribers, posted a consolidated net loss of Rs 9.62 billion on a gross revenue of Rs 61.3 billion in the March quarter, making it the sixth consecutive quarterly loss for the company. The company posted a standalone net loss of Rs 4.3 billion in the same quarter a year ago.

While the revenue fell short of the Bloomberg consensus estimate of Rs 62.09 billion, the net loss was far lower than Rs 14.70 billion estimated by analysts. Idea’s net loss was also lower than the Rs 12.85 billion loss it reported in the December quarter. The standalone net loss declined to Rs 10.18 billion from Rs 13.52 billion in the December quarter but was higher than the Rs 4.3 billion reported in the corresponding period a year earlier. Standalone numbers comprise Idea and its subsidiaries, while consolidated numbers include stakes in Indus Towers and Aditya Birla Idea Payments Bank.

Idea reported a lower sequential loss because of improvement in operating performance in the telecom business. The company’s earnings before interest, tax, depreciation and amortisation (Ebitda) increased to Rs 14.47 billion from Rs 12.23 billion in the previous quarter. The Street had estimated an Ebitda of Rs 9.82 billion. The Ebitda margin improved 480 basis points (bps) to 23.6 per cent in the March quarter. The Ebitda margin for the year, however, fell 740 bps to 21.4 per cent. 

“A sharp 4.4 per cent sequential decline in revenue owing to the IUC (interconnection usage charge) rate cut and bundled plan offerings would result in a steep 23 per cent sequential decline in Ebitda for Idea Cellular,” HDFC Securities had estimated in its report.

Motilal Oswal Securities, too, had estimated a 15 per cent sequential fall in Idea's Ebitda. High number of subscribers, along with higher usage and cost control measures, seem to have helped on the operating front, while a sharp drop in tariffs affected revenue. 

“The super-aggressive price plans, including the deep-discounted unlimited voice bundled data plans offered by most incumbent operators to retain existing subscribers exploded the voice and data volume growth. But this led to a sharp decline in consumer ARPU (average revenue per user), resulting in the industry AGR (adjusted gross revenue) falling by nearly Rs 322 billion, at a rate of 21.7 per cent versus that in 2016,” the company said in a statement.

The company also added that it had the lowest drop in AGR market share, from 20 per cent in 2016 to 19.5 per cent in 2017, among the top three industry operators.

The company said voice usage per subscriber rose sharply to 577 minutes in the March quarter from 412 minutes in the same period a year earlier, and 509 minutes in the December quarter. Similarly, broadband data usage per subscriber saw meteoric growth to 7 gigabyte (GB) in the March quarter compared to 1.4 GB a year ago, and 5.7GB in the December quarter. The broadband data volume of 1,984 billion MB increased nearly six times compared to 2016-17. The company’s ARPU fell to a low of Rs 105 from Rs 114 in the previous quarter and Rs 142 in the year-ago period.

Currently, Reliance Jio leads the ARPU table at Rs 137.1, with Airtel reporting an ARPU of Rs 116.

“The ARPU decline has led to a sequential quarterly revenue decline of 5.7 per cent to Rs 61.37 billion in the March quarter against Rs 65.09 billion in the previous quarter, including revenue impact of Rs 520 million due to reduction in international IUC from 53 paise to 30 paise per minute from February 1,” the company said.

On a year on year basis, Idea’s revenue fell 20.5 per cent to close 2017-18 at Rs 282.79 billion, while its net loss jumped 10-fold to Rs 41.6 billion from a Rs 4.04 billion loss in 2016-17.

As of March 31, Idea has net debt of Rs 523.3 billion, which includes a component of debt from the department of telecommunications as part of the ‘deferred payment obligation’ for spectrum acquired in auctions.

Idea has a subscriber base of 194.5 million, up 6 million sequentially, while competitor Jio comes close with a subscriber base of 186.6 million. Idea also reiterated that the expected merger with Vodafone would be completed by June.

Reliance Jio’s Ebitda grew 2.5 per cent sequentially to Rs 26.9 billon and, as a result, the Ebitda margin dipped marginally by 40 bps over the December quarter to 37.8 per cent. Bharti Airtel reported an Ebitda margin of 28.4 per cent for its India mobile business in the March quarter.“The ARPU decline has led to a sequential quarterly revenue decline of 5.7 per cent to Rs 61.37 billion in the March quarter against Rs 65.09 billion in the previous quarter, including revenue impact of Rs 520 million due to reduction in international IUC from 53 paise to 30 paise per minute from February 1,” the company said.

Idea has a subscriber base of 194.5 million, up 6 million sequentially, while competitor Jio comes close with a subscriber base of 186.6 million. Idea also reiterated that the expected merger with Vodafone would be completed by June.

Reliance Jio’s Ebitda grew 2.5 per cent sequentially to Rs 26.9 billon and, as a result, the Ebitda margin dipped marginally by 40 bps over the December quarter to 37.8 per cent. Bharti Airtel reported an Ebitda margin of 28.4 per cent for its India mobile business in the March quarter.