January 24, 2018 / 8:00 AM / a year ago

UPDATE 1-India's Idea Cellular posts biggest ever quarterly loss

* Q3 loss 12.85 bln rupees vs consensus est. 12.80 bln rupees

* Q3 revenue from operations down 25 pct from year ago

* Merger with Vodafone expected to be completed in H1 of 2018 (Adds details, background and share movement)

Jan 24 (Reuters) - Indian mobile carrier Idea Cellular Ltd reported its biggest ever quarterly net loss, which was also wider than what analysts had expected, as a sharp cut in interconnection fees earned from rivals eroded its revenue.

The Telecom Regulatory Authority of India (TRAI) more than halved interconnect usage charges - fees carriers pay each other for calls from one network to the other - effective from Oct. 1, 2017. The regulation knocked off about 8.20 billion rupees ($129 million) from Idea’s revenue in the third quarter.

Idea posted a 12.85 billion rupees loss for the quarter to December, its fifth consecutive quarterly loss in the ultra-competitive Indian telecoms market.

That missed the average 12.80 billion rupees estimate from 11 analysts, according to Thomson Reuters data.

Its revenue from operations fell about 25 percent to 65.10 billion rupees. (bit.ly/2n5AACI)

Idea raised its guidance for capital expenditure to 70 billion rupees for the current financial year, from a previous view of 60 billion rupees, and said it was on track to launch voice over LTE services from March 2018 onwards.

Last week, bigger telecoms player Bharti Airtel posted a lower-than-expected quarterly profit as the drop in interconnection fees, which are set to be abolished entirely from 2020, chipped away at its earnings.

Idea, India’s third-biggest telecoms carrier by revenue and subscribers, said its merger with Vodafone Group Plc’s Indian unit was expected to be completed in the first half of this calendar year.

The merger will potentially create India’s biggest telecom player in a market that has been disrupted by cut-price offerings from Reliance Industries’ telecom arm Jio.

Idea shares were trading down 5 percent after results were announced, versus the wider market that was steady.

$1 = 63.6850 Indian rupees Reporting by Tanvi Mehta in Bengaluru; Editing by Himani Sarkar

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