Moneycontrol Bureau
Idea Cellular, the country's third largest telecom operator by subscriber base, has posted a consolidated loss of Rs 385.6 crore against profit of Rs 90.04 crore in previous quarter, impacted by demonetisation and Reliance Jio's free offerings that have been extended till March 31, 2017.
On standalone basis, it reported a loss of Rs 478.9 crore in Q3FY17, for the first time in 40 quarters since its IPO in 2007, as last two years of high investments increased depreciation & amortisation charges to Rs 1,965.3 crore and finance cost to Rs 923.2 crore.
Consolidated revenue during the quarter fell 6.9 percent to Rs 8,662.7 crore compared with Rs 9,300.24 crore in previous quarter.
"The Indian mobile industry witnessed disruption in the quarter of October to December 2016, primarily due to free voice and mobile data promotions by the new entrant in sector. For the first time in history, the Indian wireless sector is trending towards an annual revenue decline of 3-5 percent in FY17 against FY16," the Aditya Birla Group company said in its filing.
Prakash Diwan of Altamount Capital Management feels Vodafone-Idea merger news is already priced in but these disappointing numbers are not enough to sustain that stock price level. The stock recovered 67 percent from 52-week low of Rs 66 hit in November, to Rs 110.35 (last Friday's closing value) on Vodafone merger talks.
Idea said in an effort to retain its existing mobile subscribers, it was forced to reduce on sequential quarterly basis its voice rates by 10.6 percent to 29.6 paisa per minute from 33.1 paisa in Q2FY17 and drop mobile data rates by 15.2 percent to 15.9 paisa per megabyte against 18.7 paisa in previous quarter.
Despite an unprecedented outgoing voice rate fall, the lure of free offerings resulted in lower than normal volume elasticity with quarterly sequential voice minutes growing only by 7.3 percent to 210 billion minutes against 195.5 billion minutes in Q2FY17, it said.
The impact of free promotions was even more pronounced on mobile data business.
"Idea, for the first time, witnessed a decline of 5.5 million mobile data customers on sequential basis, with overall mobile data subscriber base dropping significantly to 46 million in December quarter from 54.1 million in September quarter," it said.
Operating profit slipped 10.4 percent quarter-on-quarter to Rs 2,165.4 crore and margin contracted by 100 basis points to 25 percent in the quarter ended December 2016.
Earnings barring bottomline missed analysts' expectations. The company was expected to post a loss of Rs 445 crore on revenue Rs 8,870 crore and operating profit was estimated at Rs 2,415 crore with margin at 27.23 percent for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
The data average revenue per user during the quarter fell to Rs 111 against Rs 130 in Q2FY17.
During the quarter, Idea capex spend was Rs 2,000 crore, partially funded by cash profit of Rs 1,230 crore. Net debt as of December 2016 stood at Rs 49,140 crore.
The company had postponed its results announcement date from January 23 to February 11.
Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.
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