Edelweiss initiates coverage on Idea Cellular with 'Buy' recommendation

IDEA CELLULAR

RESEARCH: EDELWEISS

RATING: BUY

CMP: RS 77

Edelweiss initiates coverage on Idea Cellular with a ���Buy��� recommendation. Idea Cellular, currently operating in 17 of the 22 telecom circles in India, is set to become a pan-India player by end- ���09. The company is a unique wireless play-strong incumbent in a tough industry environment with superior spectrum profile, as well as a new entrant capitalising on new growth opportunities .

Idea���s expansion into new circles is expected to provide a leg up to its subscriber and revenue growth in the near term and offer long-term profit growth opportunities. With new launches to contribute to subscriber /revenue growth, Edelweiss believes old circles��� profitability will subsidise new circles��� losses up to FY12.

The company is in a comfortable funding position (ex-3 G) post stake sale to Axiata and Providence Equity.