High interest costs dent Idea books

High interest costs on account of third generation (3G) debt, and increased manpower costs resulted in a 41 per cent drop in consolidated net profit of Idea Cellular at Rs 106 crore, as compared to Rs 180 crore in the same quarter last year.

Interest costs almost doubled to Rs 293 crore to Rs 102 crore, hugely impacting the company’s profits. The staff costs went up by 12 per cent, due an annual wage revision in the  quarter. “The second quarter is a seasonally weak quarter. With a higher proportion of rural subscribers coming in this quarter, the seasonality becomes more pronounced,” said Himanshu Kapania, managing director.

Net sales grew 27 per cent to 4,607 crore, as compared to Rs 3,636 crore, in the same quarter last year. Ebitda (earnings before interest, taxes, depreciation and amortisation) margins increased to 25.7 per cent from 24 per cent, on a year-on-year comparison.

Average realised rate per minute grew to 42.7 paise this quarter, which has been steady at  around 41 paise for the last few quarters.

This quarter, the company’s contribution of value-added services has growth to 13.2 per cent.

“This increase is contributed by three factors — increased roaming revenue, impact of 3G data and a small impact of change in promotional tariffs in August,” said Kapania.

The company also reached the landmark 100 million subscriber base mark, this quarter. “Around 91 per cent of our subscriber base is active,” said Kapania.

The stock of Idea Cellular went down two per cent in Friday’s trade to close at Rs 91.4 per share.

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