Idea Cellular announces its maiden dividend

Net profit grows by 29%

After a quarter of good volume growth in minutes coupled with stable tariffs, Idea Cellular today announced maiden dividend to its shareholders, after 16 years of operations. As per the board decision which is yet to be vetted by shareholders, it plans to distribute three% dividend, accounting to a payout of Rs 116 crore, including dividend distribution tax.

The decision to give dividend comes after the company saw one of its best quarterly performances in the fourth quarter. Its minutes of usage (MoU) saw an 8.6% growth from the third quarter. “We have seen this kind of growth earlier, but that was on a low base,” said Himanshu Kapania, the managing director of Idea Cellular.

The company's consolidated net profit for the quarter grew by 29% to Rs 308 crore as compared to Rs 239 crore in the same quarter last year. Its total income increased by 13% to Rs 6,061 crore from Rs 5,369 crore in the corresponding quarter, last year.

Idea's data business also saw a surge as its data subscribers increased by 4.5 million in the quarter, its highest ever growth. Its 3G subscribers alone grew by a million subscribers to 5.1 million. “The data revenue on a sequential basis. There are two components to it. One of them is data volume grew by 13.8% and rates improved by 9.5%,” said Kapania.

Churn in subscribers dropped to 4.3%. Two quarters back, Idea's churn was around 10.1%. The voice tariffs, revenue per minute (RPM) however, saw no raise as it remained flat at 41.2 paise for the quarter, as compared to 41.1 paisa, in the third quarter. The contribution of value-added services also increased to 15.2% from 14.6%.

Idea also said that it will continue to remain focused on reducing costs. “We will pass on the benefits of reducing costs by holding on the rates,” said Kapania. The average revenue per user (ARPU) for the quarter stood at Rs 167 as compared to Rs 158 in the last quarter.

The operator forecasted a capital expenditure of Rs 3,500 crore for the financial year 2013-14. It plans to fund this from its own cash profits. “We will not need to raise anymore funds if there are no auctions,” said Akshay Moondra, chief financial officer of Idea Cellular. The capex will be spent on building network infrastructure around its 2G, 3G and fibre businesses. It has become more important for the operator to increase its fiber network after it started 3G operations.

For the financial year ended March 2013, Idea's annual net profit for the financial year 2012-13 grew by 39.6% to Rs 1,011 crore  as compared to Rs 723 crore a year back. Its total income grew by 15% to Rs 22,457 crore as compared to Rs 19,541 crore. Idea's stock grew by 1.2% to close at Rs 116, in today's trade.