Idea Cellular Q1 net profit jumps 28%, beats estimates

KOLKATA: Idea Cellular’s consolidated net profit for the first quarter rose nearly 28%, in line with market expectations, though growth was limited by the impact of a cut in interconnect charges and a cap on roaming rates, while pressure on its voice business continued.
For the April-June period, net profit for India’s No. 3 carrier rose to Rs 930.8 crore from Rs 728.2 crore a year earlier. Revenue increased over 16% to Rs 8,798.3 crore, mainly on the back of sustained growth in data usage by its subscribers. Net profit growth was lower due to "changes in the Trai Interconnect (IUC) regulations (Amendmend XIth and XIIth) effective from March 1, 2015, primarily reducing mobile incoming IUC charges from 20p to 14p/min", Idea said in a statement.

Revenue for the quarter is "negatively impacted by Rs 3,170 million (compared to Q1FY15), due to IUC rate changes." Additionally, reduction in the upper cap for national roaming voice call charges and SMS charges between 20% and 75% and increase in service tax rate effective from June 1, 2015, from 12.36% to 14% have also hurt the financial results for this quarter, the telco said.

Sequentially, the company’s net profit dropped a tad over 1% although revenue rose nearly 5%. Shares of Idea closed nearly 1% down at Rs 182.30 on BSE. The results were declared after-market hours.

The company raised its capex guidance for the year to between Rs 6,000 crore and Rs 6,500 crore, keeping in view the "imminent launch of LTE service in calendar year 2016 in a phased manner", it said. The company plans to launch 4G LTE services in 10 service areas in 2016.

Average voice realisation per minute (ARPM), a key performance metric, fell sharply by 11.2% year-on-year to 32.9 paise per minute, triggered by the 30% cut in interconnect charges and the higher service tax payout.

But the company’s blended ARPM fell only by a modest 1.3% to 44.5 paise/minute from 45.1 paise/minute in the year-ago period due to decent mobile data growth, which also saw the company’s non-voice revenue share rising to 26.1% from 17.8% in the earlier year.

The Aditya Birla group company expanded its consolidated operating (Ebitda) margin to 36.7% from 33.1% in the year-ago period, while sequentila growth on this count was flattish.

Average minutes of use grew sequentially to 408 minutes, up from 400 in the previous quarter. The company’s average revenue per user (ARPU), a key growth parameter, inched up sequentially to Rs 182 fromRs 179 in the previous quarter.

The company’s mobile 2G and 3G data volume increased to 62.6 billion megabytes (MB) from 54.5 billion in the fourth quarter FY15, but average realisation per MB (ARMB) fell sequentially to 24.6 paise from 25.7 paise. But Idea reported a 6.5% on-year fall in its blended data or "ARMB", from 26.3 paise in the year-ago period due to "increased competition".

However, the company added 3.7 million mobile data customers in the April-June quarter to 37.2 million, with nearly 23% of Idea’s overall data subscriber base using either 2G or 3G platforms to access the internet. Over the past one year, 3G data volume growth led overall mobile data traffic growth (2G and 3G) by nearly 1.9 times to 62.7 million megabytes (MB) from 32.1 million MB" a year ago, the company said.