Telecom major Idea Cellular second quarter net profit surges, beats estimates

Oct 24 2013, 23:58 IST
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Idea Cellular, part of the metals-to-financials the Kumar Mangalam Birla-led Aditya Birla conglomerate, said profit rose to Rs 4.4 bn. AP Idea Cellular, part of the metals-to-financials the Kumar Mangalam Birla-led Aditya Birla conglomerate, said profit rose to Rs 4.4 bn. AP
SummaryIdea Cellular profit surged 86% after it raised call prices in mobile phone market.

Private telecom operator Idea Cellular Ltd today reported a healthy 86.5 per cent rise in consolidated net profit at Rs 447.61 crore for the quarter to September, driven by robust data and voice revenues.

Total income increased to Rs 6,323.26 crore in second quarter (Q2) from Rs 5,314 crore in the year ago period.

"Despite weak rural access market during the quarter, the company has performed well. Net profit improved by nearly 86 per cent and revenue jumped nearly Rs 1,000 crore on year- on-year basis," Idea Managing Director Himanshu Kapania told reporters here.

Higher voice and data businesses helped the Aditya Birla Group firm to reach a standalone net profit of Rs 398.5 crore in the quarter, up 13.2 per cent from Rs 351.9 crore.

With increasing proportion of rural subscribers, the seasonal slowdown in the second quarter has become more pronounced resulting in sharp contraction in the voice minutes of use by 5.8 per cent to 138.8 billion minutes compared to 147.3 billion minutes in first quarter, Kapania said.

However, he said the long-term business trends remain robust and the company is on course of its mission of consistent, competitive, responsible and profitable growth.

Idea strengthened its revenue market share to 16.2 per cent and VLR (visitor location register) subscriber market share to 16.7 per cent, an improvement of over 1 per cent in a year.

The telecom firm has launched 4,312 new network sites, taking the total to 1,14,001 and expanded optical fibre network to 77,000 km.

The 'voice minutes' expansion by 10.5 per cent in Q2 was ably supported by annual active customer addition of 13.1 million.

With the company clamping down on promotional minutes for new and existing customers, the average realised rate per minute improved over the year by 3.4 paisa/minute (8.3 per cent) to 44.7 paisa/minute. The VAS contribution also increased to 16.1 per cent, further improving overall ARPM. Kapania said the company is focused on efficient cost management with overall subscriber acquisition and reduction in marketing costs by 1.6 per cent.

The revenue growth and scale benefit translated into healthy standalone Ebitda margin of 27.6 per cent, an improvement by 4 per cent, in the period under review. This helped company generate cash profit of Rs 1,455.6 crore, a growth of 18.2 per cent, further strengthening its balance sheet.

Finance cost was lower by Rs 25.7 crore at Rs 157.5 crore, while net debt fell from Rs 10,219.9 crore in Q1 to Rs 9,286.4 crore in Q2.

As competitive intensity declines and overcapacity phase comes to an inevitable end, visibility of spectrum quantum and pricing improves, Idea expects to consolidate its position in the telecom voice and data market, Kapania said.

Commenting on the QIP issue, Kapania said, "We have taken shareholders permission for QIP, but may not go ahead with the same. We have surplus funds of Rs 2,800 crore, which may be used to renew licenses of 9 circles, slated between December 2015 and April 2016."

He said there is no plan to acquire any assets as Idea has national operations and has enough spectrum.

Bigger Indian phone carriers such as Bharti Airtel Ltd , Vodafone Group Plc's local unit and Idea Cellular have cut discounts and raised some call prices this year after several of their smaller rivals were forced to exit or scale back by a court order on a massive licensing scandal.

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