New Delhi: Idea Cellular Ltd, India’s third largest mobile phone service provider, said fiscal second-quarter profit rose 86%, beating analyst expectations, after it was able to raise call tariffs in the world’s second biggest mobile phone market.

Net profit rose to 447.61 crore in the three months ended 30 September from 240.04 crore a year earlier, the company said in a statement. Revenue rose 18.9% to 6,323.26 crore from a year ago. A Bloomberg survey of more than 30 analysts had estimated the company’s September profit at 427.8 crore and sales at 6,403 crore.

Bigger rivals such as Bharti Airtel Ltd, Vodafone Group Plc’s local unit and Idea have cut discounts and raised call prices this year after several of their smaller rivals were forced to exit or scale back because of a February 2012 court order that cancelled 122 licences.

Revenue fell 3% because of a traffic decline of 6%, however, revenue per minute (RPM) grew 2.2%, which was a positive surprise, said Rikesh Parikh, vice-president (Institution Corporate Broking) at Motilal Oswal Securities Ltd. “ The Increase in RPM indicates reduction in competition intensity," said Parikh.

Idea, nearly one-fifth owned by Malaysia’s Axiata, said on Thursday it has strengthened its revenue market share by more than one percentage point to 16.2% at the end of June. Earnings before interest, taxes, depreciation and amortization (Ebitda), an indicator of operating profitability, increased 38.2% from a year ago, it added.

Idea said voice minutes expanded 10.5% to 125.6 billion minutes from a year ago, mainly supported by an addition of 13.1 million users.

On Thursday, the Idea Cellular stock fell 0.2% to 175.20 on BSE, while India’s benchmark Sensex declined 0.2% to 20,725.43 points. The results were announced after market hours.

Idea Cellular said that its September quarter growth improved because it clamped down on promotional minutes for new and existing customers, which increased the average realized rate per minute by 3.4 paise/minute (8.3%) from a year ago to 44.7 paise/minute.

The contribution of value-added services (VAS) such as caller tunes and text messages increased to 16.1% (15.6% in Q2FY13) further improving overall average revenue per minute (ARPM), the company added.

Growth in VAS services was primarily led by higher mobile data adoption. Data revenue as a percentage of service revenue improved by 3.3 percentage points to 8.7%. from a year ago with 14.7 million additional Idea subscribers using mobile data usage.

Non-data VAS revenue, which includes caller tunes and ringtones, as a percentage of service revenue fell to 7.4%, a drop of 2.8 percentage points from a year ago, following pressure from the Telecom Regulatory Authority of India’s (Trai) “new regulation of double confirmation and threat emerging from free messenger and chat OTT (over the top) applications/services".

“As competitive intensity declines and the over-capacity phase comes to an inevitable end, visibility of spectrum quantum and pricing improves, Idea expects to further consolidate its position in the telecom voice and data market," the company said.

Reuters contributed to the story.

Close