Aditya Birla group firm Idea Cellular and Anil Ambani-led Reliance Communications today posted their first-ever consolidated net loss mainly due to huge market disruption created by newcomer Reliance Jio.
Idea and RCom today found themselves among the telecom players adversely impacted by the entry of Mukesh Ambani-led Reliance Jio. Idea posted a consolidated net loss of Rs 383 crore and Reliance InfoComm reported Rs 531-crore loss in the October-December quarter of this fiscal.
Idea had registered a net profit of Rs 659.35 crore and Reliance Communications posted profit of Rs 303 crore in the same period of financial year 2015-16.
“Indian mobile industry witnessed an unprecedented disruption in the December quarter of 2016, primarily due to free voice and mobile data promotions by the new entrant in the sector. Consequently, revenue KPIs 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 to 5 per cent in FY 2017 compared to FY 2016,” Idea said in a statement.
About a fortnight back, Bharti Airtel had seen its consolidated net profit drop by more than half at Rs 503.7 crore in the October-December 2016 as compared to Rs 1,108.1 crore in the corresponding quarter of 2015-16. A week later, Vodafone too posted a decline of 4.7 per cent in its India revenue.
Idea said the telecom sector can expect to recover revenues only once the new operator (Reliance Jio) starts charging for its pan India mobile services.
“The company suffered a net loss of Rs 531 crore during the quarter primarily on account of…unprecedented competitive intensity. This was the first full quarter after the company’s complete shutdown of its profitable CDMA operations,” RCom said in a statement.
Mukesh Ambani started his second innings in the telecom sector with commercial launch of Jio service on September 5. In his previous innings, he launched Monsoon Hungama tariff plan by providing mobile phones for cash down payment of Rs 500 for Reliance Infocomm (now RComm), and phone calls at 40 paise a minute compared to then minimum rate of around Rs 2-3 per minute.
RCom said there was an increase in amortisation and interest expense aggregating Rs 278 crore on account of capitalisation of 850 MHz spectrum liberalisation fee, which too adversely impacted its financials. Both telecom operators registered decline in their consolidated total income as well despite consumers using their network more due to reduction in mobile services rates.
Idea reported income decline of 3.6 per cent at Rs 8,706.36 crore from Rs 9,032.43 crore during the period under review. The consolidated revenue of RComm fell 11 per cent to Rs 4,822 crore in the reported quarter, from Rs 5,420 crore in the corresponding period of the previous fiscal.
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