Idea delivering on revenues despite slower additions

K.Venkatasubramanian BL Research Bureau | Updated on October 21, 2011


Increase in operating expenditure, interest costs hurt profits

Idea Cellular's focus on adding fewer mobile subscribers in order to improve the quality of its revenues has continued in the September quarter as well.

Higher realisations per minute, a higher proportion of active subscribers and improving operating margins are positives.

During the quarter, the company witnessed a 26.2 per cent increase in revenues over the same period last fiscal to Rs 4,619.9 crore, while net profit fell 41.1 per cent to Rs 105.8 crore. The fall in profits has been due to increase in operating expenditure as result of expansion in newer circles and a near tripling of interest expenses to Rs 293.9 crore.

However, the operating margin, at 25.7 per cent (24 per cent in September 2010), continues to expand and is quite healthy.

Realisations improve

As with the June quarter, Idea has slowed the pace of its customer additions, with only 1.7 million being added monthly on an average.

Scorching rate of subscriber additions seen earlier, no longer seems to be the focus for operators across the board.

The realisation per minute, at 42.7 paisa, was much higher compared to the previous quarter's 41 paisa. The average revenue per user (ARPU) fell nearly 3 per cent sequentially to Rs 155, while minutes of usage fell a steeper 6.9 per cent. But the fall in minutes may be due to the seasonality with the quarter generally being weak and is likely to pick up over October-December with the period being the festive season.

The realisations may have been propped by an increase in the value-added services revenues which has increased to 13.2 per cent of the overall pie.

Among mobile operators, Idea Cellular continues to have the highest proportion of active subscribers, with 91.5 per cent of its base being regular users of mobile services.

Published on October 21, 2011

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