Idea, Airtel Q2 below expectation; Is it Jio effect?

Ever since its commencement, Jio did not fail to amaze us for even a day. From free voice call to free internet- users have been thoroughly amazed by the telecom service provider. As per the latest news all Jio subscribers will have free data till the end of 2016. However some sources feel that in order to reach a customer base of 100 million, Jio might extend the offer to March 2017.

With the growing popularity of Reliance, there are some growing concerns too. Based on user experience some claim that calling is very difficult. Internet, which was presumed to be the USP of the company, has been creating troubles too.

On the other hand, the Telecom Regulatory Authority of India (TRAI) has recommended a fine of Rs 3050 crores on three telecom majors in India; Bharti Airtel, Vodafone India as well as Idea Cellular for refusing to provide adequate Points of Interconnection (PoIs) to new entrant Reliance Jio.

All in all, Jio has been able to do what it intended, grab maximum attention of the users. Now some analysts are of opinion that the turmoil faced by the giants like Bharti Airtel, Idea Cellular is being reflected on their Q2FY17 results.

Very recently Idea Cellular posted its results for the quarter ended 30th September 2016. Revenue grew only 7.2 per cent year-on-year (y-o-y), the lowest ever growth reported by the firm. Still, they were marginally ahead of estimates by analysts, as was its operating profit.

Revenue growth in the data segment fell to 19 per cent, from 27 per cent in the June quarter and as high as 80 per cent a year before that. Falling realizations are to blame, as the chart alongside shows, but things are likely to get worse.

In the last three months, Idea share price have seen a massive fall.

On the other hand, Telecom major Bharti Airtel on Tuesday posted 4.9 per cent drop in its consolidated net profit at Rs 1,461 crores in the September quarter, mainly on account of increased spectrum related costs and devaluation of Nigerian currency. On this account Airtel concluded that consolidated revenue growth was muted at 3.3 per cent on account of full quarter impact of Nigeria currency devaluation.

Like Idea Cellular, Bharti Airtel share price has also seen a drastic drop in the share price.

Jio is still on the path of new customer on-boarding. If they extend the free offer till March 2017, it may affect its competitors further. Consumers are waiting for other carriers to put their best foot forward and bring in some good offers that can be of benefit to both the parties.

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