Idea Cellular, the third largest mobile operator in India, suffered a net loss in its fiscal Q4 (ending 31 March) as free offers from Reliance Jio forced it to cut data rates, which didn’t stem a second straight quarter of mobile data customer losses.

The operator reported a net loss of INR4.3 billion ($66.5 million) in the 2017 quarter from a net profit of INR3.55 billion in fiscal Q4 2016. Overall revenue was down 14 per cent to INR81.3 billion.

For full fiscal year it had net loss of INR4.08 billion, compared with an INR23.8 billion profit in fiscal year 2016. Full year revenue fell 1.8 per cent to INR356 million.

In its earnings statement, the operator said the Indian wireless industry witnessed “an unprecedented disruption” in the second half of the year to end-March 2017 on account of free voice and mobile data promotions by Reliance Jio.

“The October to April 2017 interval can be best described as period of ‘telecoms discontinuity’, permanently changing mobility business parameters. For the first time in its history, the flourishing Indian mobility industry is trending towards an annual revenue decline of about 2 per cent in FY17 vs FY16.”

Idea noted 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: “The company remains optimistic of revival of mobile data subscriber additions and data revenue in FY18.”

Lower tariffs
In an effort to retain its existing mobile subscribers, after Jio extended its promotions, Idea said it reduced its voice rate by 12.5 per cent sequentially during Q4 and lowered its mobile data rate by 27.6 per cent. The lower voice rate led to a 10.3 per cent increase in voice minutes during the quarter.

The discounts resulted in mobile data revenue accounting for 18.3 per cent of total mobile revenue in fiscal Q4, down from 20.2 per cent in Idea’s fiscal Q3.

Idea lost 6.4 million mobile data customers during the recent quarter, after losing 5.5 million in fiscal Q3, with its mobile data customer base falling to 42.2 million at end-March. Average mobile data usage grew 36 per cent to 957MB. Data ARPU remained flat in Q4 at INR110.

Despite the sharp drop in data customers, the opertor added 6.2 million mobile subcribers in the quarter, after adding 6.6 million in fiscal Q3, taking its user base to 198 million at end-March.

During the fiscal year it deployed 50,000 base stations, 75 per cent of which were 3G and 4G sites, taking its total 242,000. It also expanded its fibre network by 25 per cent to 145,000km. Capex for the full financial year was INR78.5 billlion: its capex guidance for FY2018 is INR60 billion.

Merger update
Idea and Vodafone in March announced an agreement to combine their operations in India to create the country’s largest telecoms operator, with about 400 million customers, a 35 per cent market share by subscribers and 41 per cent market share by revenue.

The two companies have initiated the steps to obtain regulatory approvals. A joint merger notification was filed with the Competition Commission of India and the scheme of arrangement filed with Securties and Exchange Board of India and the stock exchanges for approvals.