India's third largest telecom operator Idea Cellular said that its revenue dropped to an unforeseen level in Q4FY17 at Rs. 81,261 million, a sequential quarterly decline of 6.2 percent. This was the second quarter of decline in revenues for Idea.
The company says "the Indian wireless industry witnessed an unprecedented disruption in the second half of the financial year 2016-17 on account of free voice and mobile data promotions by the new entrant. The October-April interval can be best described as a period of telecom discontinuity, permanently changing mobility business parameters." Adding that with the new entrant starting to charge for its services, albeit very slowly, the sector is expected to return to growth in the next financial year.
Its consolidated loss for the quarter was Rs 328 crore. The company had posted a profit of Rs 452 crore in the same period a year ago.
The idea had reduced its average voice rate by 12.5 per cent to 25.9 paise a minute, compared with 29.6 paise in Q3FY17. The company has also reported a steep drop in its average mobile data rate - 27.6 per cent - to 11.5 paise per MB, compared to 15.9 paise in Q3FY17.
But despite lower rates, customers made fewer calls on the Idea network leading to lower growth in billing minutes.
"The higher blended voice realization rate fall was also an outcome of the tsunami of minutes terminating on Idea network from the new operator, resulting in the overall higher ratio of incoming minutes recorded at below cost IUC (interconnection usage charges) rates," the company said in a statement.
The company has also announced an agreement to combine its operations in India with Vodafone (excluding Vodafone's 42% stake in Indus Towers) to create India's largest telecom operator.
The combined company would become the leading communication provider in India with 400 million customers, 35% Customer Market Share and 41% Revenue Market Share (based on Q3FY17 TRAI release).
The merger transaction is subject to approval by the relevant regulatory authorities & Idea's shareholders. Vodafone & Idea have initiated necessary steps to obtain regulatory approvals. A joint merger notification has been filed with the 'Competition Commission of India' (CCI) and the Scheme of Arrangement has been filled with SEBI & Stock Exchanges for their approvals.