Recovery is expected in 2017-18 in telecom sector Report

Aditya Birla group chairman Kumar Mangalam Birla has blamed new entrant Reliance Jio for causing " unprecedented disruption" in the telecom industry, PTI reported.

According to the report, without taking Jio names, he said in a letter to shareholders that the industry has witnessed a 2 percent decline in revenues in the last financial year.

The report also mentions that he seems hopeful and said recovery is expected in 2017- 18 with the new entrant starting to charge for its services, "albeit very slowly.

To recall the company has reported 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.