 "Idea disappoints on weak voice, data pricing")
Idea Cellular on Thursday reported a 0.4 per cent year-on-year decline in its December quarter consolidated net profit at Rs 764.2 crore. This was lower than the Bloomberg consensus estimates of Rs 796 crore. Even on a sequential basis the net profit declined from Rs 809.26 crore posted in the September quarter. This is the second consecutive decline in net profit in the current financial year.
During the quarter, the firm reported a revenue of Rs 9,009.7 crore, a 12.4 per cent increase year-on-year, but marginally lower than consensus estimates of Rs 9,072 crore. In the September quarter, the firm had reported a revenue of Rs 8,689 crore.
Pricing pressure from mobile internet plans and cheaper call rates affected its net income during the quarter. Its income from voice dropped 10.6 per cent year-on-year to 31.8 paise per minute, including the impact of interconnect usage charges (IUC) rate cut that was effected in March 2015. The mobile internet margin or data realisation dropped sharply by 17.4 per cent from last year same period to 22.3 paise per megabyte (MB) during the quarter.
“There is pressure on voice and data margins because of increased supply from operators who are launching/expanding 3G/4G footprint. The lower realisation from voice due to IUC should not be visible from Q4 onwards. On data front, there is cost of acquisition for new customers, which should improve from current level onwards,” Himanshu Kapania, managing director, said.
The solace was volume growth, which was better-than-expected at 5.1 per cent. Voice minutes (volume) rose to 199.2 billion minutes from 189.5 billion units in previous quarter, a growth of 16.7 per cent. Mobile data volume increased 76 per cent to 81 billion MB in December’15 quarter.
During the quarter, the company saw slight additions to its data subscriber base, which now stands at 41.4 million from 41.3 million in September quarter. Its total mobile subscriber base is 182 million.
In the last quarter, the company launched 4G services in several south Indian towns and had to pay for spectrum charges as some of its licenses got expired in December. The firm said the spectrum charges would continue to reflect for at least a couple of quarter, which could affect net profit.
“PAT (profit after tax) is obviously going to fall till the first quarter of 2016-17, as we will have to pay the charges in April for allocation of some additional spectrum. The pressure will remain till Q1 of FY17 and after that it should be business as usual,” said Akshaya Moondra, chief financial officer.
Along with spectrum charges, capital expenditure is also going to affect earnings, he added.
The company also raised its capital expenditure guidance for the current financial year to Rs 7,500 crore, up from Rs 6,500 crore earlier. This is the second time the company raised its expenditure estimate in the ongoing financial year from Rs 4,500 crore original estimate, as it ramped up its 3G and 4G network in multiple services areas.
During the quarter, it launched 4G in December 2015 ahead of its earlier announcement to launch in 2016. The company said it raised capital expenditure guidance as it had to made additional investment in lieu of rolling out 4G network. Between April and December, the company has spent Rs 5,400 crore as capital expenditure.
In November, it had signed agreement to buy spectrum from Videocon for Rs 3,310 crore, though the deal is yet to be closed. Idea said it would set up payments bank in the second half of 2016 in association with Aditya Birla Nuvo.
