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Idea Cellular announces unaudited results for the second quarter (Q2) and half year ended 30 September 2013

24th October, 2013

Highlights - Q2 FY14
Idea - Standalone 1 Revenue Rs. 63,170mn EBITDA Rs. 17,430mn PAT Rs. 3,985mn




Idea - Consolidated 2 Revenue Rs. 63,233mn EBITDA Rs. 19,715mn PAT Rs. 4,476mn





INR mn
 
Idea standalone1
Idea consolidated 2

Q2 FY14
Q1FY14
H1FY14
H1 FY13
Q2 FY14
Q1FY14
H1FY14
H1FY13
Revenues - Established Services Areas 3
59,853
61,965
121,818
95,878
       
Revenues - New Services Areas 4
3,317
3,390
6,707
12,985
       
Total revenue
63,170
65,355
128,525
108,862
62,233
65,388
128,620 108,177
EBITDA - Established Services Areas 3
18,689
19,750
38,439
28,952
       
EBITDA - new services areas 4
(1,259)
(1,314)
(2,573)
(3,448)        
Total EBITDA
17,430
18,436
35,866
25,504
19,715
20,763
40,478 28,581
EBITDA % - Established Service Areas 3 31.2% 31.9% 63.1% 30.2%        
EBITDA% - New Service Areas 4
-37.9%
-38.8%
-76.7%
-26.6%        
Total EBITDA%
27.6%
28.2%
27.9%
23.4%
31.2%
31.8%
31.5% 26.4%
Depreciation & Amortisation
9 ,811
10,407
20,218
15,567
10,795
11,353
22,148 16,850
EBIT
7,619
8,030
15,649
9,937
8,920
9,410
18,330 11,730
Interest and Financing Cost (Net)
1,575
1,832
3,407
4,201
1,949
2,211
4,160 4,834
Dividend from Indus
-
838
838
1,543
-
-
- -
PBT
6,044
7,036
13,080
7,280
6,971
7,199
14,171
6,896
PAT 3,985 4,829 8,813 5,500 4,476 4,627 9,103 4,742
Cash profit 5
14,556
17,438
31,993
22,816
16,165
18,264
34,429 23,379
Note: Mumbai and Bihar service areas have been included in Established Service Areas from Q1FY14, previous quarters figures have not been restated.

With increasing proportion of rural subscribers, the seasonal slowdown in the second quarter has become more pronounced resulting in sharp contraction in the 'Voice Minutes of Use' by 5.8 per cent to 138.8 billion minutes compared to 147.3 billion minutes in Q1FY14.

The long-term business trends remain robust and company is on course of its mission of consistent, competitive, responsible and profitable growth. This quarter Idea standalone revenue has grown by 18.1 per cent on Y-o-Y basis to Rs.63,170 million against Rs.53,481 million revenue in Q2FY13. The company further strengthened its 'Revenue Market Share' to 16.2 per cent and 'VLR subscriber Market Share' to 16.7 per cent in Q1FY14, an improvement of over 1 per cent in one year. Idea continues to invest in long-term value creators - launched 4,312 new sites (2G+3G) to reach network site EoP of 1,14,001 sites (2G+3G) and expanded optical fibre network to 77,000 km. Inspite of higher network rollout, Idea is pleased to record sharp Y-o-Y standalone EBITDA growth of 38.2 per cent.
      
The 'Voice Minutes' expansion by 10.5 per cent on Y-o-Y basis from 125.6 billion minutes in Q2FY13 was ably supported by annual active Idea customer addition of 13.1 million, recording industry highest incremental VLR subscriber share@ 39.5 per cent (July'12 to July'13).

With company clamping down on promotional minutes for 'New and Existing Customers', the 'Average Realised Rate per Minute' improved over the year by 3.4 paisa/minute (8.3 per cent) to 44.7 paisa/minute. The 'Value Added Services' (VAS) contribution also increased to 16.1 per cent (15.6 per cent in Q2FY13) further improving overall ARPM.

The VAS services growth is primarily led by higher 'Mobile Data' adoption. The data revenue as a % of 'Service Revenue' improved by 3.3 per cent on Y-o-Y basis to 8.7 per cent. With 14.7 million additional Idea subscribers initiating mobile data usage, EoP of data subscribers increased to 33.6 million (2G+3G). The blended per user data usage grew to 178 megabytes, thereby data volume exploded @99.6 per cent to 17.5 billion megabytes in Q2FY14 over last year. However, the realised rate (ARMB) is under competitive pressure falling by 1.0 paisa per MB (3.2 per cent) on Y-o-Y basis to 31.0 paisa per MB.

In comparison, the 'Non Data VAS' revenue as a % of 'Service Revenue' has fallen to 7.4 per cent, drop of 2.8 per cent contribution over the year. The 'Non Data VAS' services are under pressure due to TRAI new regulation of double confirmation and threat emerging from free messenger and chat 'OTT' applications/services.

The company remains focused on efficient cost management with overall 'Subscriber Acquisition and Marketing Costs' reduction by 1.6 per cent on Y-o-Y basis, primarily due to lower blended subscribers churn at 5.3 per cent in Q2FY14 vs 10.1 per cent in Q2FY13.

The revenue growth and scale benefit translated into healthy standalone EBITDA margin of 27.6 per cent, Y-o-Y improvement by 4.0 per cent. This helped company generate cash profit of Rs.14,556 million, a growth of 18.2 per cent over Q2FY13, further strengthening Idea's balance sheet.

The 'Net Interest & Finance Cost' was lower by Rs.257 million at Rs.1,575 million. Company's net debt further fell from Rs.102,199 million in Q1FY14 to Rs.92,864 million in Q2FY14, helping 'Net Debt to Annualised EBITDA' ratio reach enviable 1.33.

The double bottom line drivers Voice and Data Business, helped Idea reach a standalone PAT to Rs.3,985 million, 13.2 per cent growth on Q2FY13 PAT of Rs.3,519 million (despite including Rs.1,543 million dividend from Indus). 

At consolidated level Idea revenue including 16 per cent Indus contribution has grown by 19.0 per cent on Y-o-Y basis and consolidated EBITDA by 38.6 per cent to Rs.19,715 million in Q2FY14. The consolidated EBITDA margin of 31.2 per cent is a Y-o-Y improvement of 4.4 per cent. The consolidated PAT of Rs.4,476 million grew by 86.5 per cent compared to Q2FY13 PAT of Rs.2,400 million.

As competitive intensity declines and overcapacity phase comes to an inevitable end, visibility of spectrum quantum and pricing improves, Idea expects to further consolidate its position in the telecom voice and data market.

Notes:

  1. Idea Standalone represents Idea, and its 100 per cent subsidiaries. Effectively, this encompasses all operations, excluding the joint venture i.e. Indus.
  2. Idea Consolidated represents Idea Standalone and proportionate consolidation of Indus (@16 per cent).
  3. Established Service Areas represent 15 service areas namely Maharashtra and Goa, Gujarat, Andhra Pradesh, Madhya Pradesh and Chhattisgarh, Delhi, Kerala, Haryana, Uttar Pradesh West and Uttaranchal, Uttar Pradesh East, Rajasthan, Himachal Pradesh, Punjab, Karnataka as well as Mumbai and Bihar service areas from Q1FY14 onwards. For FY13 Established Service Areas were 13, not including Mumbai and Bihar.
  4. New Service Areas represent seven service areas of Orissa, Tamil Nadu, J&K, Kolkata, West Bengal, Assam and North East from Q1FY14 onwards. For FY13 New Service Areas were nine, including Mumbai and Bihar.
  5. Cash profit is calculated as summation of PAT, Depreciation and Amortisation, charge on account of ESOPs and deferred tax, for the relevant period.
  6. Figures for past periods have been regrouped, wherever necessary.

About Idea Cellular Ltd.
Idea Cellular is the third largest wireless operator in India with a revenue market share of 16.2 per cent (Q1FY14). Idea is listed on the National Stock Exchange (NSE), and the Bombay Stock Exchange (BSE) in India. Idea is part of the Aditya Birla Group, India's first truly multinational group. The group operates in 36 countries, is anchored by an extraordinary force of over 136,000 employees belonging to 42 nationalities, and derives over 50 per cent of its revenues from operations outside India.