Jio Devastation Continues – Idea, RCom Post Their First Ever Losses Due To Jio Effect; Rs 914 Cr Collective Damage
The tsunami called Jio is continuing to wreak havoc across Indian telecom circle, and the latest casualties are Idea Cellular and Reliance Communication. Both of these telcos have reported their first ever loss in revenue and profits, and the total collective damage is Rs 914 crore.
Last month we had reported how Airtel’s excellent financial records were screwed by Jio’s free offers, and how they reported a massive drop of 54% in their net profits. Vodafone too posted a net loss of 4.7% in consolidated profits, largely due to Jio’s entry.
Idea Posts Their 1st Ever Loss In 10 Years
For the quarter ending December, Idea posted a net loss of Rs 383 crore, whereas they had reported net profits of Rs 659.35 crore for the same period last year.
And the reason explained by Idea for this unexpected turn in fortunes is plain and simple: Jio’s disruptive offers.
In a statement, Idea Cellular said, “Indian mobile industry witnessed an unprecedented disruption in the December quarter of 2016, primarily due to free voice and mobile data promotions by the new entrant in the sector.” It is no guess who is new entrant is.
Taking a stand for the whole industry, Idea has expressed their disappointment that once a ‘flourishing Indian wireless sector’ is witnessing a combined loss of 3-5% for FY 2017, compared to 2016.
Idea Cellular has plainly stated that once Jio starts charging money for their services, the conditions can improve for all telecom operators. Their consolidated revenues of Rs 8662 crore was also 4% lower than their revenues for the same period last year.and 7% lower than the quarter ending September.
As per the data available, Idea had to lower down voice rates by 11% to 29.6 paise per minute, and average revenue per megabyte decreased 15.2% to reach 15.9 paise.
This is Idea’s first ever quarterly loss since 2007.
Reliance Communication Stunned By Loss In Profit
Meanwhile, Anil Ambani-led Reliance Communication suffered a massive defeat by his elder brother’s Jio tsunami. Posting a record loss of Rs 531 crore for the quarter ending December, RCom has blamed ‘unprecedented competitive intensity’ for the loss.
In a statement, RCom said, “The company suffered a net loss of Rs 531 crore during the quarter primarily on account of…unprecedented competitive intensity. This was the first full quarter after the company’s complete shutdown of its profitable CDMA operations,”
However, RCom also attributed this loss to ‘capitalisation of 850 MHz spectrum liberalisation fee’, which happened in the last quarter. A total of Rs 278 crore was spent on the licensing fees for 850 MHz spectrum.
In case Jio decides to extend their free offers post-March 31, 2017, then we can expect even more losses from Airtel, Idea and RCom.