Seems the new entrant in the Indian telecom sector with its free data and voice offer has seriously affected the revenue of other telcos. Soon after the market leader, Airtel reported a massive drop in its net profit, India’s third largest telecom operator Idea Cellular has posted its first ever consolidated net loss since its IPO in 2007. For the quarter ended December 31, the operator posted a consolidated net loss of Rs 383.87 crore. That against a net profit of Rs 655.6 crore a year ago period and Rs 90 crore in the previous quarter.
Idea’s revenue declined to Rs Rs 86,627 million or around 3.7 percent, that’s a decline of 6.9 percent on the sequential quarterly basis. The standalone EBITDA (Earnings before interest, tax, depreciation and amortisation) fell to Rs 21,655 million, a steep drop of 23.8 percent.
“The Indian mobile industry witnessed an unprecedented disruption in the quarter of October to December 2016, primarily due to free voice & mobile data promotions by the new entrant in the sector, ” said the operator in a statement.
Wel, who to blame? Reliance Jio, the Mukesh Ambani-led telecom firm who started its commercial operation back in September 2016. The new entrant in the Indian telecom operator is currently pushing its free voice and data offer to the masses and still has not started charging its customers.
If you have missed, Idea Cellular is in talk with Vodafone for a potential merger. It is expected to be an all-share deal, that would create a new telecom leader in Indian telecom space. The combined telecom operator will have around 390 million subscribers, way ahead of current market leader Airtel’s 266 million subscribers.