Mumbai: Idea Cellular Ltd, India’s third largest mobile phone services provider by revenue and market share, fell short of analysts’ profit and sales estimates for the April-June quarter, owing to its investments on spectrum acquisition.
The consolidated net profit of the Aditya Birla Group company fell by 74.21% during the quarter ended 30 June to Rs.220.42 crore, from Rs.854.81 crore a year ago.
Consolidated revenue though was up 7.9% to Rs.9,483.93 crore, from Rs.8,789.78 crore a year ago.
A Bloomberg poll of 18 analysts had estimated a net profit of Rs.461.9 crore, while 19 analysts had put revenue at Rs.9,751.3 crore.
On Monday, shares of Idea Cellular dipped 2.83% to close at Rs.103.10 apiece on the BSE, while the benchmark Sensex gained 0.37% to close at 28,182.57 points.
The financial results for this quarter and Q1 FY16 (restated) are based on new accounting standards.
“The Q1 FY17 financial performance is not comparable with Q1 FY16 as this quarter includes 1. full impact of spectrum acquired by Idea Cellular in March 2015 (investment of Rs.30,140 crore) and February auction (investment of Rs.10,420 crore) for renewal of mobile licences in nine service areas that expired between December 2015 and April 2016 and spectrum acquired for 3G (third-generation) and 4G services in multiple circles; 2. additional deferment consequent to the change in terms regarding carry forward conditions of unused data entitlement in data packs has negatively impacted the quarter’s revenue by Rs.127.6 crore, Ebitda (earnings before interest, taxes, depreciation and amortization) by Rs.110.10 crore and Ebitda margin by 0.7%,” the company said.
The finance cost of the company rose by 123.82% to Rs.988.17 crore for the reporting quarter.
Himanshu Kapania, managing director at Idea Cellular, said the company’s participation in spectrum acquisition had led to decline in the net profit and all spectrum acquisition costs had been priced into the quarter under review.
“We are transitioning from being a pure voice player and looking to enter new markets... Aggressive expansion is also underway. A new mobile broadband site is getting opened every 10 minutes,” Kapania said, adding that Idea is striking a balance between voice and data.
Kapania said that Idea will decide on participation in the upcoming spectrum auction closer to the scheduled date.