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Business trends

Mobile price war drains India's top 3 carriers

No.4 Jio's aggressive rate-cuts bite Airtel, Vodafone and Idea profits

A woman waits at a bus stop with an advertisement of Reliance Jio in Mumbai. The telecom unit of conglomerate Reliance Industries has jolted the mobile service market in India.   © Reuters

MUMBAI -- India's top three mobile carriers continued to take a hit from the price-cutting offensive by Reliance Jio Infocomm in the April-June quarter.

Bharti Airtel, Vodafone India and Idea Cellular sustained a decline in earnings, while the telecom arm of energy conglomerate Reliance Industries enjoyed a surge for the three-month period. A relative newcomer to the industry, Jio began its service in 2016. It has since put downward pressure on India's mobile rates, which were already among the lowest in the world.

Idea Cellular said Monday that its stand-alone quarterly revenue shrank 28% on the year to 58.9 billion rupees ($859 million). The third-ranked player booked a net profit of 5.1 billion rupees for the quarter, pivoting from a year-earlier loss of 6.2 billion rupees. But this was largely thanks to proceeds from selling its base-station business. Its operating loss widened, and average revenue per user dropped 5% from January-June to 100 rupees a month.

Market leader Bharti Airtel's Indian business sustained an operating loss of 8.7 billion rupees, although group operations remained in the black. Vodafone India's quarterly revenue fell to 959 million euro ($1.12 billion) from 1.38 billion euro.

Meanwhile, fourth-ranked Reliance Jio's stand-alone sales for the quarter soared to 81.1 billion rupees from 3 million rupees. Aggressive advertisements, low-price plans and virtually free handsets helped increase its subscribers to 215.3 million as of the end of June. The company's market share reached 18.17% at the end of May, closing in on Idea Cellular's 18.94%, according to the Telecom Regulatory Authority of India.

Drastic changes in the market have prompted Idea Cellular and second-ranked Vodafone India to combine their operations. Authorities recently approved the integration, which is scheduled to take place by the end of August, according to Vodafone India. The resulting company would become the top player in India, surpassing Bharti Airtel.

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