Idea Cellular Q3FY16 profit declines: Stock hits fresh 52-week low

Idea Cellular, India’s third largest telecom service provider announced its Q3FY16 results on Thursday after market hours. Idea Cellular missed estimates while posting a 6 per cent fall in consolidated profits on a sequential basis. However, volume growth remained strong.

Idea Cellular’s third quarter revenue increased marginally by 4 per cent sequentially to Rs 9009.69 crore compared to Rs 8689.06 crore achieved in last quarter of the same fiscal year, attributed to good volume growth of 5.1 per cent. Indus tower company contributed 16 per cent to its total revenue. On an operational front EBITDA increased by 2 per cent to Rs 3128.52 crore Q-O-Q (quarter on quarter) compared to Rs 3057.03 crore in the September quarter. Margins remained flat at 35 per cent. Profits after tax saw a decline of 6 per cent to Rs 764.21 crore, paralleled to Rs 809.26 crore realized in the preceding quarter of FY16.

On a yearly basis revenue increased by 12 per cent due to strong growth in data revenues. EBITDA grew by 14 per cent Y-O-Y. Margins too expanded by 100 basis points to 35 per cent. PAT growth remained flat on a yearly basis. However, finance cost rose significantly by 58 per cent Y-O-Y as company undertakes capex.

Total subscriber base at the end of December quarter stood at 17.19 crore, an increase of 3.2 per cent Q-O-Q. Voice minutes’ volume increased to 199.2 billion minutes during the quarter, from 189.5 billion minutes. However, ARR (Average Realization per minute) declined sequentially to 44.8 paisa from 45.3 paisa due to competitive pricing pressure. ARPU (Average Revenue Per User) increased to Rs 176 compared to Rs 175 attained in the second quarter of FY16. 

Blended churn rate increased to 5.3 per cent from 5.1 per cent in the previous quarter. Blended churn means the percentage of subscribers in a given time frame that cease to use the company’s services for one reason or another. On data front, data ARPU increased to Rs 145, as against Rs 144 in the September quarter. Data revenue growth has been bogged down by intense pricing pressure witnessed in the sector. Data usage increased 6.2 per cent to 653 MB from 615 MB. Data as a percentage to service revenue increased by 600 basis points to 20.2 per cent Q-O-Q. 

The company’s subscriber market share (on VLR) has raced past 19.1 per cent (October 2015 TRAI Report) and Revenue Market Share stands at 18.5 per cent for Q2FY16, an improvement of 1.2 per cent in the share (VLR & RMS) over the last one year. Idea has maintained leadership position on overall MNP (Mobile Number Portability) net additions. As on December 31, 2015 Idea has a net MNP gain of 17.1 million customers from other telecom operators. 

Idea Cellular also raised its capex guidance for this fiscal year through March 31 to Rs 7500 crore, from Rs 6000-6,500 crore estimated earlier, to fund an "accelerated" 4G rollout. 

Reacting to its below par, Q3 results, Idea scrip corrected by more than 7 per cent to hit an intra- day low of Rs 105.60 on BSE. Another telecom stock Bharti Airtel too was trading down 5 per cent.