Reliance Jio's free services hit Idea Cellular's Q4 margins; posts net loss of Rs 328 crore

Idea Cellular, India`s third-biggest telecoms operator, posted its second straight quarterly loss after a rival carrier`s free services hit sales and eroded margins.

The free offerings of Reliance Industries` telecoms venture Jio, which started operations late last year, have sparked a fierce price war in the world`s second biggest mobile phone market, forcing rivals such as Idea to launch cheap service plans.

That has impacted revenues and profitability across the uber-competitive telecoms sector.

Idea, part of the Aditya Birla conglomerate, on Saturday said it made a consolidated net loss of about Rs 327.9 crore ($51.06 million) in the three months to March 31, compared with a net profit of about Rs 451.9 crore a year ago.

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Analysts had, on average, expected the wireless carrier to post a loss of Rs 714 crore according to Thomson Reuters data.

The group`s net loss from its core telecom operations, which does not include its stake in a telecom tower joint venture, was even higher at Rs 430 crore on a standalone basis.

"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 said in a statement. 

Idea cut voice tariffs by 12.5% while data prices were reduced by 27.6% in the quarter, compared with the three months to December, it said.

Net sales fell 14.3% on year to about Rs 8,110 crore in the December quarter, Idea said.

India`s top telecoms operator Bharti Airtel last week reported its smallest quarterly profit in more than four years.

Jio`s onslaught had also forced rivals to re-group to remain competitive.

Vodafone Group Plc`s Indian subsidiary and Idea have agreed a $23 billion merger that will create the market`s biggest carrier while Bharti has taken over Norwegian Telenor`s operations in six Indian states.

On Friday, the stock of Idea Cellular closed up 1.65% or Rs 1.50 at Rs 92.30 on the BSE.