Idea Cellular slips into red with Q3 net loss of Rs 384 cr

Idea, for first time, witnessed decline of 5.5 mn mobile data customers on sequential quarter basis

Telecom operator Idea Cellular today logged a consolidated net loss of Rs 383.87 crore for the December 2016 quarter compared to a net profit of Rs 659.35 crore in the year-ago period, hurt by newcomer Reliance Jio's free voice and data promotions.

Total income also has decreased to Rs 8,706.36 crore for the quarter, from Rs 9,032.43 crore in the same period in the previous year, as per a BSE filing.

"The Indian mobile industry witnessed an unprecedented disruption in the quarter of October to December 2016, primarily due to free voice and mobile data promotions by the new entrant in the sector," Idea Cellular said in a statement.

Consequently, revenue KPIs (key performance indicators) and financial parameters for all mobile operators have sharply declined, and for the first time in its history, the flourishing Indian wireless sector is trending towards an annual revenue decline of 3-5 per cent in 2016-17 (vs 2015-16), it added.

"The sector can expect to recover revenues only once the new operator starts charging for its pan-India mobile services. As a result of this current industry upheaval, the standalone Idea revenue dropped to an unforeseen level at Rs 8,662.7 crore, a decline of 6.9 per cent on sequential quarterly basis," it said.

Idea, which is in talks with rival Vodafone for a merger, said it was "forced to reduce" its voice rates on sequential quarterly basis by 10.6 per cent to 29.6 paise per minute (versus 33.1 paise in the second quarter of 2016-17) and drop in mobile data rates by 15.2 per cent q-o-q to 15.9 paise per megabyte (vs 18.7 paise).

"Despite an unprecedented outgoing voice rate fall, the lure of free offerings resulted in lower than normal volume elasticity with the quarterly sequential voice minutes growing only by 7.3 per cent to 210 billion minutes (vs 195.5 billion minutes in second quarter of 2016-17), that too led by double digit growth in incoming call volume," Idea said.

Also, the higher blended voice realisation rate fall was also an outcome of the "tsunami of minutes" terminating on Idea's network from the new operator, resulting in overall higher ratio of subsidised incoming minutes recovered at below cost IUC settlement rates.

Idea, for the first time, witnessed a decline of 5.5 million mobile data customers on sequential quarter basis with overall mobile data subscriber (2G+3G+4G) base receding to 48.6 million (vs 54.1 million in second quarter of 2016-17).

Its net debt stood at Rs 49,140 crore at the end of December 2016, including a larger proportion of this debt from DoT under 'Deferred payment obligation' for spectrum acquired in last four spectrum auctions.

Idea's capex spend was Rs 2,000 crore (excluding forex and interest capitalisation) in the reported quarter, partially funded by cash profit of Rs 1,230 crore.