The newly merged Vodafone-Idea Cellular consolidation, reported a net loss of RS 5,005 crore, during the third quarter of FY 2018-19. Vodafone- Idea merger which completed on August 31 2018 has reported a massive loss in both the quarters since it merger. The reported loss was a bit lower then the expected one, but the it still seems to be grappling with the stiff competition from its new arch rival Reliance Jio .
Reliance Jio’s entry has forced the other telecom rivals to offer low-tariff plans. Jio’s offers of free subscription and low Tariff plans has led to migration of costumer from other operators to Jio which is another significant reason behind such losses.
The Voafone-Idea merger reported a 2.2% rise in revenue taking its revenue to Rs 11,375 while the EBTIDA margin remained at 9.7% which was at 8.1% in the preceding quarter. In its first quarter after merger, Vodafone-Idea limited reported a loss of RS 4974. Recently the Vodafone-Idea limited removed its low paying costumers to improve its ARPU and removed around 35 million users who were mostly Incoming users.
Not just Vodafone-Idea, but Bharti Airtel too is also facing the same issues.On Tuesday the company was downgraded by Moody’s investor services to “junk” status which is a below investment grade can have serious effects on its investments.
These huge losses shows how much disruption Jio’s entry has caused in the Telecom market. Jio’s arrival has forced the other telecom operator like Vodafone and Idea either to offer low tariff plans or to merge in order to survive the on going tariff war.