Idea’s net drops 88% to ~91 cr
Idea Cellular on Monday reported a 88 per cent year-on-year (y-o-y) drop in its consolidated net profit at ~91.5 crore for the September 2016 quarter, mainly on account of higher expenses and inflationary pressures, even as the company witnessed a decline in voice realisation. Net profit was way lower than the ~193.7 crore estimated by analysts, according to a Bloomberg poll.
The country’s third largest mobile operator had reported a net profit of ~762.3 crore in the year-ago period.
“Higher network running expenses due to accelerated expansion, increased subscriber acquisition and servicing cost, and multiple inflationary pressures resulted in overall operating cost increase,” the firm stated.
The Aditya Birla Group firm further said its margin was adversely impacted by depreciation charges of ~1,954.3 crore (up 36.1 per cent y-o-y) and finance cost of ~1,004 crore (up 221 per cent).
Idea added the launch of 4G services in 10 circles and 3G in some areas also had its impact on margin.
The company’s revenue, however, increased 7.2 per cent to ~9,300.2 crore in the reported quarter from ~8,675.4 crore in the year-ago period. The Street had pegged revenue at ~9,417 crore.
Idea said its sequential voice revenue declined 5.3 per cent mainly because of the voice realisation rate, which dropped 3.4 per cent from 34.3 paise a minute in the first quarter of FY17 to 33.1 paise a minute in the second quarter, and fall in voice minutes.
Also, high competition in the sector is resulting in slow revenue growth trends, with Idea’s overall quarterly revenue growth at its lowest at 7.2 per cent. Operating profit came in at ~2,840 crore versus ~2,790 crore in the yearago quarter, but again, it was lower than the Bloomberg consensus estimate of ~2,990.7 crore.
The company’s results conform to Indian Accounting Standards (Ind AS).
“With the adoption of Ind AS, the financials of Indus (joint venture) and ABIPBL (associate) are consolidated at PAT (profit after tax) level only. Accordingly, the consolidated total comprehensive income, including 16 per cent share from Indus and 49 per cent from ABIPBL (Aditya Birla Idea Payments Bank) stands at ~90 crore against ~757 crore in the second quarter,” Idea said. Idea said it was looking to increase its investment in the network by ~1,000 crore.
“The company is gearing up to expand its wireless broadband coverage using the spectrum won in recently concluded auction and plans to spend incremental equipment capex of ~1,000 crore in FY17. With this, the capex guidance is revised from an earlier level of ~6,500-7,000 crore to ~7,500-8,000 crore,” Idea said.
“In the past two years, the company has made ~45,000 crore of investment and which has been used to buy spectrum as well as to be able to incrementally add 85,000 sites,” Himanshu Kapania, managing director of Idea Cellular, told Business Standard.
“We are in the process of building a world-class broadband infrastructure. When you are making such large upfront investments, the monetisation and profits are going to follow but, currently, we are in investment phase,” he added.