Airtel, Idea Cellular, RCom may face loss in Q4 2016, says experts

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There might be a chance that incumbents telecom companies i.e Idea, Bharti Airtel, Vodafone and Reliance Communications may face loss in their Q4 (financial year, January-March) revenue, according to experts.

Airtel, Idea Cellular, RCom may face loss in Q4 2016, says experts

"Margin pressure on telcos will continue as long as the free data offer from Reliance Jio continues. As and when Reliance Jio decides to withdraw its offer and start charging for its data services, then it will be a different matter," Arpita Pal Agrawal, partner and leader, Telecom Industry Practice, PricewaterhouseCoopers India, told IANS.

"Customers will then compare telco offerings on parameters such as price points, throughput speed, tariff bundles, service experience to decide about their preferred operator option," she added

SEE ALSO: Telcos lost 20% revenue due to Jio free services

Jio has already announced earlier that their free services will continue until March 2017.

Bharti Airtel third quarter net profit slumped 55 per cent from a year earlier, Idea Cellular posted a loss of Rs 478.9 crore for the third quarter, Reliance Communications also reported a net loss of Rs 531 crore in the same quarter.

In a statement, Gopal Vittal, MD and CEO, India & South Asia, said: "The quarter has seen turbulence due to the continued predatory pricing by a new operator. The presenttermination costs at 14 paise which are well below cost has resulted in a tsunami of minutes terminating into our network. This has led to an unprecedented year on year revenue decline for the industry, pressure on margins and a serious impact on the financial health of the sector.

SEE ALSO: Airtel to launch hybrid DTH STB to combat Jio's DTH service

Similarly Idea said while announcing its result "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." Adding that, "the sector can expect to recover revenues only once the new operator starts charging for its pan India mobile services."

Anil Ambani-led Reliance Communications said in a statement that, "The industry witnessed unprecedented competitive intensity. This was the first full quarter after company's complete shutdown of its profitable CDMA operations. And there was an increase in amortisation and interest expense aggregating Rs 278 crore on account of capitalisation of 850 MHz spectrum liberaliation fee."

Ever since Mukesh Ambani announced Jio service in the country all telecom companies are introducing new tariff plan to retain customers.

"India is a very price sensitive market; any such offering tends to be disruptive. Incumbent operators need to implement strategies to retain their high-value customers," Rishi Tejpal, Principal Research Analyst for Telecom Business Strategy at Gartner, told IANS.

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