Idea Cellular: Margin expansion steady

K. Venkatasubramanian BL Research Bureau | Updated on March 10, 2018


Quality, active subscriber base the key

Idea Cellular appears to be embarking on a different growth trajectory with its strategy of adding quality subscribers and churning out the less lucrative ones.

Stable average revenues per user (ARPU) and per-minute realisations, expanding operating margins and a substantively active subscriber base are some of the key highlights in the June quarter.

The company saw revenues expand by 23 per cent over the same period last year to Rs 4,520.7 crore, while net profit fell around 12 per cent to Rs 177.3 crore. The fall in profits has been largely due to interest costs of Rs 246.3 crore, more than double last year's figures.

Operating margins though have been increasing steadily over the last 4-5 quarters to 26.6 per cent in the June quarter.

Lucrative additions

Idea, which used to add around 2.5 million subscribers every month in the previous quarters, saw that figure come down to 1.9 million this quarter, due to increased focus on deriving ‘quality revenues'. This has meant that ARPU which was on a declining trend, has remained flat at Rs 160, as has the realisations per minute at 41 paisa. Some of the company's peers such as Bhati Airtel and Vodafone too have seen decreased pace of subscriber additions in recent months.

What is important is that the total minutes of usage continues to go up steadily, which may give the opportunity for Idea to monetise them at some stage.

With the company reportedly looking to hike call rates in select areas, there could be significant margin improvement over the next 3-4 quarters.

In terms of active subscribers present in the network, Idea leads the chart with 86.6 million or 92.2 per cent of its total base regularly using their mobile connections. This is a welcome trend.

Published on July 29, 2011

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