Idea Cellular has managed to beat market expectations in terms of higher profit growth as well as expansion in its operating margins in the March quarter.

Decreasing losses in geographies where it has recently entered, a greater proportion of active revenue generating subscribers and increase in minutes of usage were key highlights during the quarter.

During the March quarter, the company's revenues increased by 7 per cent sequentially to around Rs 4,235 crore, while net profit expanded by a healthy 13 per cent to Rs 274.5 crore, signalling a second successive quarter of healthy financials.

But metrics such as ARPU (average revenue per user) at Rs 161 and realisations per minute at 40.6 paise continue to be strained. This suggests some lag effect of the tariff war.

Rapid expansion

Idea has managed to decrease operating losses in its new service areas (Rs 117.3 crore in the recent quarter) continuously over the last four quarters while steadily increasing its EBITDA (Rs 1,066.7 crore in March quarter) in its eight established circles. This has meant an increase in overall operating margins to 25.4 per cent, up more than a percentage point from the start of the fiscal.

The minutes of usage in the network increased by 9 per cent sequentially and propped revenues.

Going by the data from the telecom regulator on the proportion of mobile subscribers who are ‘active' (those that regularly recharge and stay connected), the company scores the top position with 93 per cent, making for a desirable subscriber base. Out of a total 89.5 million base, 83.3 million of its subscribers are active.

While the company's net-debt to equity at 0.74 is among lowest vis-à-vis peers, a capex plan of Rs 4,000 crore in the current fiscal may push the ratio upwards.

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