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Idea Cellular Q2 profit sinks 58% to Rs 91 cr, revenue falls 2%

Chillicious Bureau

Aditya Birla Group company Idea Cellular disappointed analysts on Monday with consolidated profit falling sharply by 58.5 percent sequentially to Rs 91.4 crore in July-September quarter.

Revenue during the quarter declined 2 percent to Rs 9,300 crore compared with Rs 9,486.6 crore in previous quarter, partially led by voice minutes decline and rest due to rate fall in mobile voice & data segment on hyper competition.

“With increasing proportion of rural subscribers, the seasonal slowdown in Q2FY17 has followed past trends, resulting in voice minute contraction on sequential quarterly basis by 1.9 percent to 195.5 billion compared with 199.3 billion in Q1FY17,” Idea said in its filing.

According to analysts polled by CNBC-TV18, profit was estimated at Rs 130 crore on revenue of Rs 9,360 crore for the quarter.

Idea’s sequential voice revenue declined 5.3 percent due to voice realisation rate fall at 3.4 percent from 34.3 paise in Q1FY17 to 33.1 paise in Q2FY17 and decline in sequential voice minutes.

Consolidated EBITDA (earnings before interest, tax, depreciation and amortisation) slipped 7.6 percent QoQ to Rs 2,840.3 crore and margin contracted by 187 basis points to 30.54 percent in Q2 on higher operating expenses, which too were below expectations of Rs 3,000 crore and 32 percent, respectively.

“Higher network running expenses due to accelerated expansion, increased subscriber acquisition & servicing cost, and multiple inflationary pressures resulted in overall operating cost increase,” the company reasoned.

Higher other income (that increased 96.1 percent QoQ to Rs 129.06 crore) and lower tax cost (that fell 78.65 percent to Rs 24.72 crore) supported bottomline in Q2. Finance cost increased marginally to Rs 1,004.4 crore in September quarter compared with Rs 988.2 crore in previous quarter.

The telecom operator said standalone profit in Q2 plunged 91.3 percent to Rs 4.3 crore and cash profit slipped 23 percent to Rs 1,940.7 crore on sequential basis.

Blended mobile data ARPU (average revenue per user) fell to Rs 130 from Rs 144 in Q2FY16 but data usage per subscriber increased to 694 MB during the quarter from 615 MB in same period last year.

In the recent spectrum auction, Idea acquired 349.2 MHz of spectrum and expanded spectrum portfolio by over 64 percent.

In Q2, its capex spend was Rs 2,000 crore, largely funded from cash profit of Rs 1,940 crore. It revised capex guidance to Rs 7,500-8,000 crore from Rs 6,500-7,000 crore earlier.