You are here: Home » PTI Stories » National » News
Business Standard

Idea Cellular Q2 loss at Rs 1,107 cr; flags challenges

Press Trust of India  |  New Delhi 

today posted a loss of Rs 1,106.80 crore for the second quarter of the current fiscal, saying that the business was hit by pricing pressure and introduction in a "challenging" operating environment.

The company -- which is headed for a with Vodafone -- had reported a net profit of Rs 91.5 crore in the July-September quarter of the last fiscal.

"The operating environment for Indian mobile operators remained challenging with unrelenting pressure on pricing, introduction of Goods and Services at 18 per cent (compared to service at 15 per cent) and need for large to support the exploding data demand," Idea said in a statement.

Although "seasonal industry slowdown" is in sync with the past trends, the September quarter impact on the company's subscribers and loss was more pronounced as always given its higher share of rural subscribers, Idea said.

Its from operations fell 19.72 per cent to Rs 7,465.5 crore in the July-September quarter of the current fiscal, from Rs 9,300.3 crore in the year-ago period.

Shares of Idea were trading 2.78 per cent down to Rs 94.35 a piece on BSE.

The company said its while broadband data usage nearly doubled, the rate realisation "continued its free fall" during the three months ended September. The voice realisation rate fell by 9.9 per cent over the June quarter, and mobile data realisation fell more sharply by 49.2 per cent.

The per subscriber also fell by 6.6 per cent to Rs 132 as against Rs 141 in June quarter.

Idea's sequential quarterly voice minutes grew by 1.7 per cent to 255 billion minutes (against decline of 1.9 per cent in Q2FY17) and mobile data volume saw strong sequential growth of 73.5 per cent.

The company is "on course" to introducing Voice over Long-Term Evolution (VoLTE) -- a standard for speedy wireless communication -- by early 2018, the statement added.

Idea and Vodafone have recently entered into active infrastructure sharing arrangement, to avoid duplication of spends and make best use of capex (capital expenditure), the statement added.

The Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter declined nearly 20 per cent to Rs 1,501.6 crore hit by lower revenue and higher operating cost related to roaming and access (as outgoing minutes increased) and as also annual increments.

Besides, the depreciation and amortisation charge increased to Rs 2,114.3 crore and interest and financing cost rose to Rs 1,182.9 crore as the company continued to aggressively invest in expanding its 4G footprint, the statement added.

Idea's net debt as on September 30, 2017 was Rs 54,100 crore, including a large component of deferred payment obligation for spectrum acquired in auctions.

Idea said its plans with Vodafone is on track and the final petition for approval of scheme of arrangement has been filed with the National Company Law Tribunal (NCLT). The approval of shareholders and creditors for the has already been taken following a meeting organised by Idea under NCLT's supervision in October, it noted.

Idea and Vodafone have also decided to sell their standalone tower business in India to ATC Telecom Infra for Rs 7,850 crore. Idea will get Rs 4,000 crore (and Vodafone Rs 3,850 crore) from the tower deal if sale completion precedes telcos' merger.

"On completion of Idea and Vodafone India merger, 6,300 co-located tenancies on the combined standalone tower businesses will be merged into single tenancy, within a staggered period of two years, without a penalty fee," the Idea statement added.

The established telecom operators have seen locked in a fierce tariff war to protect their turf, following the entry of aggressive newcomer Reliance Jio in the market.

The incumbent operators have blamed competitive pressures triggered by the free and disruptive offers of Jio, for the financial stress in the sector.

India's telecom company Bharti Airtel posted 76.5 per cent fall in consolidated net profit to Rs 343 crore for the September quarter.

Last week, Reliance Communications reported a consolidated loss of Rs 2,709 crore in the second quarter ended September 30, 2017, marking the fourth straight quarter of loss for the debt-laden company.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, November 13 2017. 12:57 IST