Mumbai: Idea Cellular Ltd, part of the Aditya Birla group and India’s fourth largest telco by subscribers, disappointed analysts, reporting a sharp fall in the usage (in terms of call minutes), a slide in quarterly revenues, and flat average realization per minute (ARPM) despite doubling its net profit for the quarter ended September.
With the overall wireless telecom business outlook for the second quarter (July-September) remaining muted due to headwinds emerging from an uncertain regulatory regime, weak seasonal demand and the continued battle for market share, Idea Cellular’s consolidated profit after tax (PAT) at Rs.240 crore increased a marginal 2.5% sequentially but was more than double of the Rs.105.8 crore profit posted a year ago.
The Idea stock closed 0.49% up on Monday at Rs.81.25 on BSE even as the bourse’s 30-share benchmark index Sensex rose 0.59% to close at 18,793.44 points. The company announced its earnings after market hours.
The telco’s consolidated revenue at Rs.5,314 crore was up 15% compared with the year-ago figure of Rs.4,619 crore, but down from the Rs.5,503 crore figure posted in the preceding quarter.
Idea’s standalone revenue, however, was up 3.4% at Rs.5,348 crore against Rs.5,538 crore, sequentially.
The company’s stand-alone PAT stood at Rs.352 crore, up from Rs.198 crore in the preceding quarter.
However, during the quarter, Aditya Birla Telecom Ltd, or ABTL, (a fully-owned subsidiary of the company) received a dividend of Rs.154 crore from Indus Towers Ltd, and the same is reflected in its stand-alone PAT and cash profit figures.
The company management said with the increasing proportion of rural subscribers, the seasonal slowdown in the second quarter became more pronounced, resulting in sharp contraction in the “voice minutes of use” by 4%, to 125.6 billion minutes in the three months ended September, compared with 130.9 billion minutes in the preceding quarter.
The company, however, reported an improvement of Ebitda, or earnings before interest, tax, depreciation and amortization, margin by 0.3% to 23.6%, “primarily through optimization of subscriber acquisition and servicing and advertisement and business promotion expenditure”, according to a release.
The overall results are disappointing, said Harit Shah, senior research analyst with Nirmal Bang Institutional Equities, given the fall in the usage of minutes and flat average revenue per user, or Arpu, figures.
Although the margins were “decent” due to optimization of selling and general administrative expenses, Shah was “not sure about how the company would be able to sustain such margins”.
The absolute Ebitda in the second quarter of fiscal 2013 improved by 20.9% year-on-year compared with Ebitda of the corresponding quarter in 2012.
Shah said that the increase in data revenues was a positive for the company. Idea managed to increase its “non-voice revenue” contribution to 15.6% from 14.5% in the preceding quarter.
“All said, till the telecom mess is sorted out at the policy level, I wonder how much one should read into these results,” Shah said.
The company’s average realization per minute was flat at 41.3 paise against previous quarter ARPM of 41.2 paise, in a falling voice ARPM market.
Idea had a cash profit of Rs.1,231 crore in the September quarter.
The management said the company’s third-generation, or 3G, investment plans “are on track and high speed broadband services are now available in 3,500 towns (census and non-census) in 20 service areas (including roaming arrangements)”.
At least 18.9 million of Idea’s strong 115 million subscriber base use mobile data services, contributing 5.4% of total service revenue, the company said in its release.