Idea swings to first net loss since 2007

India’s third largest mobile operator Idea Cellular has swung to its first annual loss since its IPO in 2007, as the company felt the pressure being inflicted on the mobile industry by the entry of disruptive newcomer Reliance Jio Infocomm.

The company reported a net loss of 4.07 billion rupees ($63.5 million) for the full-year ending in March. This compares to a 23.78 billion rupee profit for the previous year.

Total revenue fell 1% to 355.75 billion rupees, marking the first revenue decline since the IPO. Revenue from established service areas fell 1.8% to 329.58 billion rupees but revenue from new service areas up 9.5% to 26.17 billion rupees.

India’s mobile industry has been struggling since Jio burst onto the scene in September with an aggressive strategy of offering services for completely free for a six-month promotional period.

“The October to April 2017 interval can be best described as ‘Period of Telecom Discontinuity’, permanently changing mobility business parameters. Consequently, the revenue KPIs & financial parameters for all mobile operators have sharply declined in [2H17],” Idea said in a statement announcing its results.

“For the first time in its history, the flourishing Indian mobility industry is trending towards an annual revenue decline of ~2% in FY17. 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.”

During the March quarter, revenue fell 6.2% sequentially to 81.26 billion rupees, even as the company added 6.2 million new customers to 198.3 million.

The operator also strengthened its revenue market share for calendar year 2016 by 0.4% to 19% and maintained a subscriber market share of 19.4%.

Idea Cellular meanwhile announced that it is making progress with its planned merger with Vodafone India, a deal expected to create the market’s largest telecoms operator.

The two companies have initiated the steps required to gain regulatory approvals for the merger, including filing a joint notification with the Competition Commission of India.