Idea Cellular’s Q3 Loss Lower Than Expected

Idea Cellular Ltd. reported a lower-than-estimated quarterly loss even as its revenue declined after the telecom regulator reduced interconnect charges by more than half.

Net loss for the quarter ended December stood at Rs 1,285 crore compared to a net loss of Rs 1,107 crore in the previous three months, the Mumbai-based telecom operator said in a stock exchange notification. That compared with a loss of Rs 1,309 crore estimated by analysts tracked by Bloomberg.

Revenue fell 12.8 percent quarter-on-quarter to Rs 6,510 crore—again lower than the the Rs 6,682 crore estimate. Its average revenue per user was Rs 114 during the quarter, down from Rs 132 in three months ended September.

The world’s second-largest telecom market is locked in a tariff war triggered by Mukesh Ambani’s Reliance Jio Infocomm Ltd. The Telecom Regulatory Authority of India’s decision to reduce interconnect fee—that operators earn for completing calls by rival network subscribers—to 6 paise a minute from 14 paise has further hurt revenue and profit.

Idea Cellular’s operating income or the earnings before interest, tax, depreciation and amortisation fell 18.5 percent to Rs 1,223 crore, sequentially, and the operating margins contracted 132 basis points to 18.79 percent during the quarter.

Shares of Idea Cellular extended losses for the third straight day, falling as much as 6.1 percent after the earnings announcement, compared to a 0.1 percent decline in the benchmark S&P BSE Sensex. The stock is trading 7.5 percent below the Bloomberg consensus one-year target price. It has declined 13 percent so far this year.