Idea Cellular Q1 net plunges 74.5% on spectrum payout, revenue up 8%

Mumbai: Country's third largest telco Idea Cellular Monday reported a massive 74.5 percent fall in consolidated net income to Rs 217.1 crore for the three months to June 30, on spectrum capex and changes in recognising data revenue.

On a standalone basis, the profit slipped 36.1 percent to Rs 497.1 crore from Rs 777.8 crore a year ago, the company said.

Total income grew 7.9 percent on a consolidated basis to Rs 9,486.6 crore, while pretax profit stood at Rs 1,155 crore, down from Rs 1,567.64 crore a year ago.

Pre-tax profit margin slipped to 32.4 percent for the reporting quarter from 33.9 percent a year ago, which its chief financial officer Akshaya Moondra attributed to higher network and IT spends and also dip in 3G inter-connection revenue it earned from other operators.

The Aditya Birla group company also changed the way it recognises data revenue, which forms 20.6 percent of the revenue pie to recognise income only after data usage.

Moondra said this has resulted in a hit of Rs 128 crore to the topline, but stressed that this was a one-time hit. Additionally, there was spectrum payouts for March 2015 and February 2014 periods.

He further said because of the data deferment charges and the spectrum payouts, where the exact figure was not shared, the bottomline is not comparable.

The company said at the end of June quarter, its active 4G customers stood at over 18 lakh, while 2.7 crore customers were using 3G or 4G data services with 1.03 crore addition in last one year.

Its overall mobile data users reached 4.9 crore at the end of June with blended mobile data average revenue per user of Rs 142 in the reporting period which was Rs 147 a year ago. The blended Arpu, including voice, slipped a notch to Rs 181 from Rs 182 a year ago.

Managing Director Himanshu Kapania said Idea is following a "volume-led" strategy on the data front, which will soon be witnessing aggressive competition with the entry of Reliance Jio, due to which the Arpus are going down.

Kapania said the company is expanding aggressively on the data front, saying it is installing one site every 10 minutes and already has 40,000 sites.

He said data usage is moving from classes to masses, but each telco is trying to locate the "sweet spot" when it comes to pricing.

Moondra said the company invested Rs 1,080 crore during the quarter and maintained Rs 6,500-7,000 crore guidance for the fiscal, excluding the money which gets invested in the upcoming spectrum auctions that begins from September 29.

Kapania said Idea will continue to look at expanding

network and enter new markets post the next month's spectrum auction, and expressed the confidence that the bidding will not be as aggressive as the industry is moving into an era of "spectrum glut" from "spectrum scarcity" due to which companies will not bid in "frenzy" and stick to economic fundamentals.

Meanwhile, the company has decided to create a separate entity to house its tower assets and will look at "creating value" by housing the unit separately, Moondra said.

Accordingly, Idea Cellular has already transfered over 9,700 towers into Idea Cellular Infrastructure Services, the newly-created entity, he said, adding its 16 percent stake in leading tower company Indus Towers will continue to be held by its wholly-owned subsidiary Aditya Birla Telecom.

Moondra said nearly 70 percent of the management team for the new entity is already in place and the company is hoping to have the entire structure in place in the next three-four months.

Idea Cellular counter fell 2.8 percent to Rs 103.1 on BSE as against a 0.37 percent gain of the Sensex.