Idea Cellular reports Q1 net profit of Rs 217 crore
Idea Cellular said the financial results for the quarter are based on Ind AS (Indian Account Standard) and hence are not comparable with the earlier quarter.
Standalone net profit fell to Rs 497.1 crore in the April-June quarter. Consolidated net profit slumped 74% on year to Rs 220.4 crore.
“This quarter results include the full impact of spectrum acquired by Idea in March 2015 (investment of Rs 301.4 billion) and February 2014 auction (investment of Rs 104.2 billion) for renewal of mobile licenses in nine service areas expired between December 2015 to April 2016 and spectrum acquired for 3G and 4G services in multiple circles,” Idea said in a statement Monday.
Interest cost surged almost 185%, while depreciation and amortisation costs rose 36% on year. Net debt stood at Rs 376.6 billion as on June 30.
Revenue for the Aditya Birla Group carrier increased almost 8% to Rs 9,486.6 crore, mainly on the back of an increase in realised voice rates from 183 million subscribers. After six quarters of declining realised voice rates, Idea cut promotional offers for two quarters in a row, improving its voice rate by 3.1% sequentially, after a 4.4% growth in the previous quarter, the company said.
“Since January 2016, Idea clamped down on promotional offers for its new and existing customers, resulting in voice realised rate improvement,” the company said. It added that the full benefits of the rate realisation improvement did not reflect in revenue growth because the telco lost some subscribers and the total voice minutes of use fell by 1.1% on quarter.
?Idea Managing Director Himanshu Kapania told reporters that ?the telco's voice rates, which are higher than market leader Bharti Airtel's, have peaked and will be brought down to the level of its larger rival.
Idea reiterated that wireless broadband consumer demand growth is slower than increased supply from operators launching or expanding 3G and 4G footprints, which is increasing competitive intensity, forcing the carrier to cut effective rates.
Average realised rate from data services fell 8.1% sequentially, “resulting in sequential mobile data revenue growth limited to 4.1%,” Idea said.
The fall in rates spurred the addition of 5 million mobile data users, the highest so far, and Idea ended June with 49 million data subscribers.
Data as a percentage of service revenue rose to 20.6% from 20.1% in the previous quarter.
Idea is trying to attract premium customers for its 4G offering, which now covers almost 2,000 towns and 5,000 villages in 10 service areas. At the end of June, over 1.8 million customers actively used Idea 4G services.
Average revenue per user increased to Rs 181 from Rs 179 in the previous quarter, while average voice revenue per user rose by Re 1 sequentially. Data revenue per user fell Rs 5 on quarter.
The company, almost a fifth owned by Malaysia’s Axiata, reiterated its plans to spend Rs 6,500-7,000 crore in the current financial year, excluding the cost of new spectrum that may be acquired and the associated expenditure.
The higher network and operating expenses due to expansion and multiple inflationary pressures resulted in an overall operating cost increase, hurting operating margins, which contracted to 32.4% from 33.9% a year ago.