Idea net jumps 64% to Rs 767 cr in Q3

Subscriber addition of 22 mn in 2014 the highest in segment; plans to keep debt ratio under control despite key spectrum auction

Telecom service provider Idea Cellular had a 64 per cent jump in consolidated net profit to Rs 767 crore for the quarter ended December 2014, third in this financial year, due to growth in data volume and voice minutes.

It had reported a net profit of Rs 468 crore in the same quarter of the previous financial year.

Consolidated revenue grew 21.2 per cent to Rs 8,017 crore for the quarter over a year before. Revenue was 0.7 per cent more than Bloomberg estimate and adjusted net profit was 2.8 per cent lower. Sequentially the revenue was up six per cent and net profit by 1.5 per cent.

"During the quarter, Idea carried 170.7 billion minutes on its network, registering 5.1 per cent sequential quarterly growth and 46.1 billion megabytes of mobile data on its 2G+3G platform, with both lines of business delivering strong performance," the company said.

Healthy turnover growth, scale benefit and cost rationalisations also helped Idea report significant improvement in Ebitda (earnings before interest, taxes, depreciation and amortisation) margins. These rose 143 basis points over the earlier quarter (and 330 bps over a year before) to 34.3 per cent.

"Despite strong Ebitda performance, a change in depreciation policy kept the sequential growth in bottom line at a meagre 1.5 per cent. Led by reduction in useful life of core network equipment, depreciation and amortisation costs got inflated by Rs 262 crore. Barring this, the jump in net profit could have been much steeper," says Nitin Prakash Daga, analyst, Microsec Research.

Mobile data now contributes 15.7 per cent to service revenue and the value added service contribution has improved to 23.1 per cent of service revenue. Due to competitive pressures and increased contribution from new service areas, the voice realisation remained under pressure, the company added.

However, an 18.4 per cent quarterly jump in mobile data revenue, contributing 15.7 per cent to service revenue, helped Idea improve average realisation per minute to 46.3 paise in the third quarter vs 45.9p in the second quarter.

The average revenue per user increased by Rs 10 to Rs 179 from the same period a year before. Sequentially, this metric was up by Rs 3.

In 2014, Idea added 22.2 million subscribers, highest addition in the segment. The company said revenue market share in the second quarter was 17.2 per cent, a rise of 1.4 per cent from the same quarter a year before.

The coming spectrum auction is crucial for the company, as a licence in nine telecom circles comes for renewal. Idea said it had brought down its debt by Rs 737 crore to Rs 11,089 crore and the net debt to Ebitda ratio was a comfortable 1.12. "We do not want to go over-leveraged and would like to balance between our capital expenditure on spectrum and rollout of 3G (third generation) services," said Himanshu Kapania, managing director.

The share's price gained 1.1 per cent on Tuesday to Rs 170.35 on the BSE exchange. These results were announced after market hours.