Idea's Q2 gets boost from higher data volumes

Numbers beat Street expectations and would have been even better but for the dip in voice ARPUs

Idea Cellular managed to beat market expectations on the back of higher growth from data and an uptick in realisations. Net profit for the quarter stood at Rs 779 crore as against consensus estimates of Rs 682 crore. As expected, voice volumes fell 1.7 per cent on a sequential basis but the fall was lower than the 5.8 per cent decline seen in the September quarter last year.

The management indicated that the weakness in voice usage was on account of the monsoon as well as a higher proportion of users from rural areas as compared to the other players. Voice average revenue per user (ARPUs) fell 6.7 per cent sequentially to Rs 139 per month. Data growth and stable prices helped improve realisations by 1.8 per cent sequentially. Though usage came down, better realisations helped keep revenues stay flat at Rs 7,567 crore for the September quarter (against an expectations of Rs 7,440 crore)

The top line performance impacted margins, which at 29.6 per cent were 30 basis points down on a sequential basis. The operating performance percolated down to the net level, which saw a fall of 23 per cent. The fall would have been higher but for the reduction in interest costs which came down 41 per cent sequentially to Rs 117 crore. This was due to the Rs 3,000 crore raised via the qualified institutional placement in the June quarter and Rs 750 crore in the September quarter, which, coupled with cash flows, helped reduce debt.

As in the previous quarters, the company continues to do well on the data front, with higher usage per subscriber boosting data average revenue per user both on the 2G as well as 3G platforms. Data volumes were up 21 per cent on a sequential basis, while data subscribers were up 11 per cent. Higher data usage helped data ARPUs go up 10 per cent on a sequential basis to Rs 119 per month, while 3G data ARPUs were higher by 38 per cent to Rs 196. Data, which now accounts for 14 per cent of service revenues (up from 11.5 per cent in the June quarter), has crossed the Rs 1,000-crore revenue mark.

The key event going ahead for Idea is the upcoming auctions next year, as it needs to retain spectrum in key circles. The company believes it is prepared, given the recent cash infusions, operational cash flows and raising of debt for the auctions.