Idea Cellular feels the pressure of Jio pricing in Q3: Angel Broking

Views of Angel Broking:

"For the third quarter ending December 2017, Idea Cellular reported net profits of Rs.1285 crore, largely in line with street expectations. This takes the cumulative loss of Idea Cellular for the first 9 months to over Rs.3000 crore and this starkly contrasts with the loss of Rs.78 crore that Idea had reported in the corresponding 9 months last year. Top-line revenues for the company fell by 12.5% to Rs.6510 crore on QOQ basis.

There were two key reasons for this huge loss. Firstly, the pressure applied by the aggressive pricing policies of Jio and also Bharti Airtel has taken its toll. Secondly, Idea had to also contend with the reduction in interconnect fees. Telecoms receive interconnect fees when calls originating from another network land on their network. It may be recollected that the Telecom Regulatory Authority of India (TRAI) had cut the interconnect fees from 14 paisa per minute to 6 paisa per minute.

The more eloquent story of Idea's losses is in the Average Revenues per Unit (ARPU), an important metrics for telecom companies. Idea's ARPU fell sharply to Rs.114 in the third quarter from Rs.132 in the second quarter. Compared to Idea, Bharti Airtel had an ARPU of Rs.123 while Reliance Jio enjoyed an ARPU of Rs.154. That probably sums up the story of Idea's Q3 results."

Shares of IDEA CELLULAR LTD. was last trading in BSE at Rs.95.15 as compared to the previous close of Rs. 94.05. The total number of shares traded during the day was 1657493 in over 5044 trades.

The stock hit an intraday high of Rs. 97.5 and intraday low of 92.1. The net turnover during the day was Rs. 158250971.

Source : Equity Bulls

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