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Idea Cellular announces unaudited results for the second quarter (Q2) and half year ended September 30, 2012

22nd October, 2012

Highlights - Q2 FY13
Idea - Standalone 1 Revenue Rs. 53,481 mn EBITDA Rs. 12,615 mn PAT Rs. 3,519 mn
Idea - Consolidated 2 Revenue Rs. 53,140 mn EBITDA Rs. 14,225 mn PAT Rs. 2,400 mn

INR mn
 
Idea standalone1
Idea consolidated 2
Q2 FY13
Q1FY13
H1FY13
H1 FY12
Q2 FY13
Q1FY13
H1FY13
H1FY12
Revenues - Established Services Areas 3
47,064
48,814
95,878
82,325
       
Revenues - New Services Areas 4
6,417
6,568
12,985
9,789
       
Total revenue
53,481
55,382
108,862
92,113
53,140
55,037
108,177 91,407
EBITDA - Established Services Areas 3
14,377
14,575
28,952
24,276
       
EBITDA - new services areas 4
(1,762)
(1,687)
(3,448)
(3,173)        
Total EBITDA
12,615
12,889
25,504
21,103
14,225
14,355
28,581 23,907
EBITDA % - Established Service Areas 3 30.5% 29.9% 30.2% 29.5%        
EBITDA% - New Service Areas 4
-27.5%
-25.7%
-26.6%
-32.4%        
Total EBITDA%
23.6%
23.3%
23.4%
22.9%
26.8%
26.1%
26.4% 26.2%
Depreciation & Amortisation
7,881
7,685
15,567
13,115
8,526
8,325
16,850 14,395
EBIT
4,734
5,203
9,937
7,988
5,700
6,031
11,731 9,512
Interest and Financing Cost (Net)
1,825
2,376
4,201
4,599
2,164
2,670
4,834 5,402
Dividend from Indus
1,543
-
1,543
-
-
-
- -
PBT
4,452
2,828
7,280
3,389
3,536
3,361
6,897
4,110
PAT 3,519 1,981 5,500 2,334 2,400 2,341 4,742 2,831
Cash profit 5
12,313
10,502
22,816
16,493
11,858
11,522
23,380 18,493
With the 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 4 per cent to 125.6 billion minutes as compared to 130.9 billion minutes in Q1FY13. 

The overall wireless telecom business outlook for the quarter remains muted due to headwinds emerging from uncertain regulatory interventions, weak seasonal demand and continued grim battle for market supremacy, resulting slide in Idea's sequential quarterly revenues by 3.4 per cent to Rs.53,481 million against Rs.55,382 million in Q1FY13. 

The company was quick to spot the external challenges and inspite of a fall in demand, is happy to report an improvement of EBITDA margin by 0.3 per cent to 23.6 per cent, primarily through optimisation of 'Subscriber Acquisition & Servicing' and 'Advertisement & Business Promotion' expenditure.  Additionally, Idea continued to invest in long term value creators - launched 3,023 new sites (2G+3G) and expanded new business streams - ILD, ISP and Devices. The absolute EBITDA in Q2FY13 has improved by 20.9 per cent (YoY) when compared with EBITDA of Q2FY12.

The Average Realisation Per Minute (ARPM) was flat at 41.3p against previous quarter ARPM of 41.2p, in a falling voice ARPM market, supported by increasing mobile data contribution. The company has managed to increase 'Non-Voice Revenue' contribution to 15.6 per cent; an improvement from 14.5 per cent in Q1FY13, while fully complying with TRAI's latest stiff and consumer friendly 'VAS Regulations'.

During the quarter ABTL (a fully owned subsidiary) has received a dividend of Rs.1,543 mn from Indus; and same is reflected in 'Standalone' PAT and cash profit. However, this dividend income gets eliminated in the 'Consolidated' financials.

Idea maintained last quarter trend of Free Cash Flow (after Capex) with Q2FY13 cash profit of Rs.12,313 million against Rs.10,502 million for Q1FY13. This was supported by lower Interest and Financing cost (net) at Rs.1,825 million (drop by Rs.550 mn in comparison to Q1FY13) due to strengthening of Indian Rupee and dividend payment from Indus. The standalone 'Profit After Tax' stands at Rs.3,519 million in comparison to Rs.1,981 million in Q1FY13.

Company's 3G investment plans are on track and high speed broadband services are now available in 3,500 towns (census and non-census) in 20 service areas (including roaming arrangements). The company, in its own way, is assisting development of 3G ecosystem, with the launch of 4th Idea branded 3G handset AURUS. Over 18.9 million of Idea's strong 115 million subscriber base, use mobile data services, contributing 5.4 per cent of total service revenue.

Idea is confident to overcome the current uncertain regulatory phase, emerge stronger as the overcapacity comes to an inevitable decline, consolidate its position in the telecom voice market and aggressively expand in the ever evolving wireless broadband business.

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 13 service areas namely Maharashtra and Goa, Gujarat, Andhra Pradesh, Madhya Pradesh and Chhattisgarh, Delhi, Kerala, Haryana, Uttar Pradesh West and Uttaranchal, Uttar Pradesh which East, Rajasthan and Himachal Pradesh, Punjab and Karnataka service areas.
  4. New Service Areas represent nine service areas of Mumbai, Bihar, Orissa, Tamil Nadu, J&K, Kolkata, West Bengal, Assam and North East.
  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.
  7. The divisional bench of Hon'ble Delhi High Court, vide its order dated 13th July 2012, reaffirmed amalgamation of erstwhile Spice Communications Limited (spice) with the company. The said order also re-vested unto the company the telecom licenses, which were transferred and vested unto DoT pursuant to order dated 4th July 2011 passed by single Judge of Hon'ble Delhi High Court. Vide a separate order dated 13th July 2012, the said divisional bench has also directed the DoT to decide on transfer of licenses with in a period of three months and dispute if any, between the company and DoT relating to such transfer should be referred to Hon'ble TDSAT for resolution. Vide its letter dated 28th September 2012, DoT has requested the company to submit a fresh application to consider transfer of licenses, which the company has since complied. Meanwhile the DoT has made an application to the said division branch to extend the said period of three months, which expire on 12th October 2012, by a further period of four months. The divisional bench of Hon'ble Delhi High Court, vide its order passed on 17th October, 2012 has given further time to the DoT till 11th November 2012 to take final decision on transfer of licenses.       
  8. The Hon'ble Supreme Court, while pronouncing its judgment dated 2nd February 2012 in the writ petition filed, inter alia, by the Centre for Public Interest Litigations and others, quashed the press release dated 10th January 2008 issued by the DoT and consequent grant of licenses including operational licenses held by the company for seven service areas and six non-operational licenses, (four out of the said six non-operational licenses having been granted to erstwhile Spice Communications Limited) and allocation of related spectrum. On 27th August 2012, the Hon'ble Supreme Court, further extended the timeline till 11th January, 2013, for conducting and completing the auction in terms of directions contained in order dated 2nd February, 2012, while allowing licensees to continue operations till 18th January 2013. On 28th September 2012, DoT has issued notice inviting applications and as per the timelines mentioned therein, the auction for 1800 MHz spectrum will start on 12th November 2012. As of date, the company has filed its application for participating in the auction.

About Idea Cellular Limited
Idea Cellular is the third largest wireless operator in India with a revenue market share of 14.9 per cent (Q1FY13). 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 53 per cent of its revenues from operations outside India.