Idea weathers falling revenue to turn a profit in Q2

Idea weathers falling revenue to turn a profit in Q2

Indian number three Idea Cellular has posted a profit for its fiscal Q1 despite falling revenue and ARPU.

For the quarter ending 30th June, Idea’s net income reached INR2.57 billion ($374 million) thanks to a standalone profit of INR33.6 billion generated by the sale of its tower assets in May 2017. This marked a turnaround from its net loss of INR8.15 billion over the same period last year, although its consolidated revenue saw a year-on-year fall to INR58.9 billion.

A statement from Idea noted that the mobile sector was declining as the extreme discounts on voice and data tariffs being offered by “one of the operators” – referring to Reliance Jio - were “forcing commensurate response from existing mobile operators to retain subscribers”. Idea noted that offering bundles at the current, below-cost levels was unsustainable and would adversely affect the bottom line of all operators.

While competition has been fierce, since last year Idea has retained a stable base of around 188 million. It also saw a spike in mobile data usage, with subscribers typically using 8GB of data per month across the past quarter, up from 3GB in the same period last year. Its broadband network now covers around 55% of India’s population, with 5688 3G and 4G sites added during the quarter to bring its total sites to 160,000.

Last month, Idea and Vodafone India – the country’s second largest operator – had their merger cleared by the Department of Telecommunications after agreeing to pay fees worth $1B. The deal is on track to close imminently, and will create a new Indian market leader.

In a statement, Idea seemed upbeat about the future of the market, saying: “with the exit of subscale operators, consolidation of industry structure is nearly complete. Once the current phase of below cost tariffs is over, it is inevitable industry ARPU will revive. Additionally, the low rural penetration, improving adoption of data users and SIM consolidation augur well for long-term prospects of existing large mobile operators.”

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