Idea Cellular Q3 net profit rises 14%

MUMBAI: Telecom operator Idea Cellular said third quarter net profit rose less than expected 14% as higher network running costs, diesel prices and advertising spend squeezed margins.

Net profit in the three months to December rose to Rs 227 crore from Rs 201 crore in the year-ago quarter, a company statement said. An ET Now poll had forecast net profit at Rs 252 crore.

While revenue rose 11% to Rs 5,579 crore, operating margin (earnings before interest, tax depreciation and amortization) slipped 30 basis points to 26.4%. Losses from Idea's more recently established service areas widened marginally to an operating level of Rs 179 crore from Rs 176 crore in the previous quarter.

"Our strategy for these circles was not aggressive, and it was meant to contain losses," chief financial officer Akshaya Moondra told ET. "Now that we have gotten the spectrum back (through the auction), we believe it is time to rollout more aggressively. Our target would be to increase market share to 10% in these markets needing investment, and hence wider losses in the near-term."

Moondra also said the company is generating free cash other than its payouts for spectrum and can therefore reduce its net debt from the current Rs 11,682 crore.