Idea Cellular’s third quarter consolidated net profit grew 13.7 per cent to Rs 228.5 crore compared with Rs 201 crore in the corresponding quarter last year.
Its revenues went up 11 per cent to Rs 5,578 crore compared with Rs 5,031 crore in the corresponding quarter last year. On a quarterly basis, however, revenues grew only five per cent due to the impact of increased input costs, with increase in diesel and electricity prices, and the impact of network operation costs. The company also increased its advertising and promotional expenses in the third quarter.
The average realised rate, or ARR, fell this quarter to 41.1 paisa as compared to 41.3 paisa in the second quarter due to the reduction of the share of value-added services in its revenues. Some of the value-added services include cricket updates and music downloads, among others. Tougher regulations with regard to subscriber acquisition, like more verifications, also increased the subscriber acquisition cost.
Himanshu Kapania, managing director, said the country has embarked on a new era of growth in subscribers. “Discount-seeking customers looking to replace recharge with new SIM card will be less inclined to do that with stricter verifications. The subscribers added will now include new users,” he said.
This behavior has also showed up in reduced churn which has reduced to 6.9 per cent from over 10 per cent. The company believes that with the re-acquisition of spectrum that was cancelled, and being a pan-India player, they are at a position to increase their market share.
Spectrum acquisition has increased the company’s net debt to Rs 11,682 crore, and its net debt to EBIDTA (earnings before interest depreciation tax and amortization) ratio to 2.2 per cent from 2.1 per cent in the second quarter. “After three subsequent quarters of debt reduction, this quarter has seen an increase in debt,” said Akshaya Moondra, chief financial officer of the company.
