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Idea Cellular Q2 beats expectations, profit rises 3.8%

The News International Team

Telecom operator  Idea Cellular surpassed street expectations on every parameter with the second quarter net profit rising 3.8 percent to Rs 756 crore from Rs 728.2 crore in previous quarter on lower finance cost.

Idea Cellular reversed the last 2 years trend of sequential revenue decline during the seasonally weak ‘July to September’ quarter due to contraction in voice minutes of use.

“The strong consumer demand & brand association, expanding 2G & 3G network footprint, competitive spectrum portfolio with steady cash flows from operations affirms Idea ability to deliver consistent, competitive, responsible and profitable growth,” the company said in its filing.

According to the average of estimates of analysts polled by CNBC-TV18, profit was expected at Rs 660 crore on revenue of Rs 7,417 crore for the quarter.

Consolidated revenue increased marginally to Rs 7,569.9 crore in the quarter ended September 2014 compared to Rs 7,561 crore in June quarter.

Operating profit slipped 0.5 percent sequentially to Rs 2,490.7 crore and margin declined 20 basis points to 32.9 percent in the quarter gone by as against forecast of Rs 2,413 crore and 32.53 percent, respectively.

Interest and financing cost slipped significantly to Rs 144.5 crore in July-September quarter compared to Rs 227.5 crore in previous quarter because of reduction debt.

With an additional equity infusion (by selling Rs 750 crore worth of preference shares to telecom partner Axiata Investments 2) and strong cash profit of Rs 1,815.5 crore in the quarter, Idea reduced its net debt by Rs 2,150 crore to Rs 11,826.9 crore.

Idea said the net debt to annualised EBITDA ratio stands at 1.32, providing the company sufficient headroom to participate in the forthcoming 900 MHz spectrum renewal auction.

Key performance indicators

The telecom operator’s average revenue per minute (ARPM) grew by 1.8 percent to 45.9 paise from 45.1 paise on sequential basis

“While the voice rate realisation was under pressure, but 22.5 percent quarterly jump in mobile data revenue, contributing 14 percent to service revenue, helped Idea improve ARPM by 0.8 paisa,” it explained.

However, voice revenue per minute declined to 36.2 paise from 37.1 paise quarter-on-quarter.

Average revenue per user declined (up 7.3 percent Y-o-Y) to Rs 176 from Rs 181 during the same period. Minutes of usage per subscriber during the quarter dropped sequentially (up 4.3 percent Y-o-Y) to 384 minutes from 401 minutes.

During this quarter, the company carried 162.5 billion minutes on its network, less pronounced seasonal quarterly decline of 1.7 percent, in comparison to 5.8 percent minute decline in Q2FY14 (Q-o-Q). It was better than expectations of 4 percent decline at 158.6 billion minutes.

Mobile data
 
“Mobile data volume exploded to 39.4 billion MB on its 2G+3G platform at 21.3 percent Q-o-Q growth, reaffirming consumer preference for brand Idea,” said the company.

Idea managed to maintain the mobile data average realisation per MB (ARMB) at 26.5 paisa in Q2FY15 versus 26.3 paisa in Q1FY15. “The explosive mobile data volume growth and steady ARMB has helped Mobile data quarterly revenue cross Rs 1,000 crore mark. The mobile data consumer base has risen in this quarter by 3.1 million to 30.9 million,” it added.

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