India’s Idea Cellular reports first-ever crippling losses due to Jio freebies

India’s Idea Cellular which is a part of the Aditya Birla House announced on Saturday that its accumulated net losses amounted to of 3.84 billion rupees in its third quarter ending December 31. Last year for the corresponding period it had made a profit of 6.59 billion Rupees

The entry of Jio has made life exceedingly difficult for other telecom operators. Smug with scant competition and profits, telecom service providers were milking the consumers dry. However, as the adage goes after the climb the fall is inevitable, and this has come true for most service providers. Idea Cellular has reported one of the biggest losses of all times. The losses were much higher than the expected 3.84 billion Rupees. The story is no different for other Telecom operators like Reliance Communications which is also reporting high third quarter losses.

Reliance Jio Communication which is run by the country’s richest tycoon, Mukesh Ambani entered the Indian Telecom scene in September, and things have never been the same since then. Rival operators tried every trick up their sleeve but to no avail. Jio first brought the concept that consumers will have to pay only for one service, Data services and they will be able to call free anywhere in the country. It was a crippling blow, and worse was to come. Reliance offered free data services for the new consumers who are hooked to the Jio network first for three months, and it was again extended for another three months.

The India telecommunication segment became highly competitive, and most rival service providers were forced to follow suit, and the biggest beneficiary was the Indian consumer who lapped the freebies eagerly and with delight. Other companies followed suit and started offering a flurry of offers ranging from free 3GB free data/ every month for one year by Airtel and Vodafone who was offering unlimited Data for one hour for only Rs 16. All these measures had a debilitating effect on companies who found their costs spiraling and margins being eroded.

Companies are now talking about joining hands to form one of the biggest carriers in the history of telecommunication. However, Jio with its huge surplus funds has shrugged off all talks about the rivals merging and even spoke about continuing the freebies for even longer periods. The TRAI or the regulating telecom body of the country is looking into complaints by rivals against Jio of unfair practices.

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