Idea Q3 loss widens to Rs 1,284 cr; blames IUC rate cut

PTI New Delhi | Updated on January 24, 2018 Published on January 24, 2018

Telecom operator Idea Cellular today reported deeper losses of Rs 1,284.5 crore for the quarter ended December 31, 2017 hurt by a “sharp” cut in call connect charges and the “unrelenting” rate pressure.

Idea’s losses stood at Rs 383.9 crore in the year-ago period, and Rs 1,106.6 crore in the trailing September quarter, as per a BSE filing.

The merger with Vodafone India is in the final leg of regulatory approval and is expected to complete in the first half of 2018, Idea said in a statement.

The numbers comes nearly a week after Bharti Airtel reported over 39 per cent fall in consolidated net profit for third quarter this fiscal to about Rs 306 crore.

In contrast, Reliance Jio posted profits of Rs 504 crore in just second quarter of commercial operations on the back of dirt cheap data offerings. The aggressive newcomer, which has often been blamed by the industry for its financial woes, yesterday unleashed yet another round of data tariff war.

Idea’s revenue from operations was at Rs 6,509.6 crore for the third quarter, almost 25 per cent lower than Rs 8,662.7 crore in the same period previous fiscal.

The company blamed reduction in call connect charges and the sustained rate pressure for the impact on its earnings.

“The regulation imposed 57 per cent sharp decline in IUC (Interconnect Usage Charges) settlement rates...negatively impacted Idea’s Revenue and EBITDA for this quarter by Rs 8,200 million (Rs 820 crore) and Rs 2,300 million (Rs 230 crore), respectively,” the statement said.

The earnings before interest, tax, depreciation and amortisation or EBITDA is a measure of a company’s operational performance.

Consequent to gross revenue decline primarily due to call connect charge revision, the EBITDA for the quarter declined by 18.5 per cent to Rs 1,223.3 crore as compared to Rs 1,501.6 crore in September quarter.

The net debt as on December 31, 2017 was at Rs 55,781.8 crore, including a large component of debt for spectrum acquired in auctions.

The statement further said the fall in domestic call connect charges effected from October 2017 aggravated the industry’s financial stress. “Therefore, this quarter results are not comparable to the earlier periods,” it added.

Still, factors like existing multi-SIM users consolidating their usage to one operator, customers going for high value bundled plans, voice subscribers upgrading to 4G services, and 300-400 million Indians entering the 2G wireless category, are expected to play out positively, it said.

In the voice segment, the ‘usage per subscriber’ has risen sharply to 509 minutes in Q3 FY18, Idea said.

The ‘data usage per subscriber’ surged from 703 MB a month (Q3FY17) to monthly usage of 4,742 MB during this quarter, it added.

“Idea remains on course to introduce its own VoLTE — ’Voice over LTE’ from March 2018 onwards in main markets,” it pointed out.

The capital expenditure for the current quarter was pegged at Rs 1,750 crore.

Lamenting the decline in the domestic call connect charges, Idea said the move along with the recently - announced drop in ‘International mobile termination’ settlement charges deals “a body blow to all operators“.

“The international IUC rate drop only benefits the foreign operators, with no commensurate benefit to Indian consumers but with significant foreign exchange and revenue loss to the Indian exchequer,” it added.

Idea said it is in the process of raising up to Rs 6,750 crore equity to strengthen combined entity’s (Voda-Idea) balance sheet.

It noted that the Board has already approved issuance of 326.6 million shares on preferential basis to promoter group entities for a total Rs 3,250 crore.

Further, the board has also constituted a committee to evaluate potential routes for raising additional equity capital of up to Rs 3,500 crore, including via Preferential Issue, Qualified Institutional Placement or Rights Issue.

“The proposed capital raising of up to Rs 6,750 crore will reduce Idea’s net-debt and as a result Vodafone net-debt contribution to the merged entity will also be reduced by a commensurate amount,” Idea said.

The companies have already received approval for the proposed combination from Competition Commission of India, market regulator and stock exchanges and the National Company Law Tribunal (NCLT), Bench of Ahmedabad and Mumbai.

The Idea stock closed 5.38 per cent lower at Rs 94.05 on BSE.

Published on January 24, 2018
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