Idea tops Street's estimates, reports 28 per cent rise in net profit

Business Standard
22 July 2015

Idea Cellular, the flagship mobile company of the Aditya Birla group, reported a 28 per cent year-on-year (y-o-y) increase innet profitin the June quarter to Rs 930.8 crore. This was ahead of the Street's estimates of Rs 911 crore and driven by healthy growth in data and voice volumes. Profits were driven by robust growth in mobile data volumes. Sequentially, however, profits were down 1.16 per cent. The company said it has carefully studied the market for launch of 4G services and is expecting to roll out the upgraded services from January 2016 in 10 circles where it has bought licences.

Both data and voice have driven revenue growth for Idea in the June quarter. The total number of minutes on the network rose 5.8 per cent quarter-on-quarter to 195.8 billion minutes. Mobile data volume grew 15 per cent sequentially to 62.7 million megabytes.

Idea's management said the revenue was impacted to the tune of Rs 317 crore due to reduction of interconnection usage charges (IUC) by the Telecom Regulatory Authority of India (Trai). The lowering of roaming charges by the regulator also impacted the top line. During the first quarter of FY16, Idea's consolidated revenues grew 16.4 per cent y-o-y and 4.5 per cent sequentially to Rs 8,798 crore.

Himanshu Kapania, managing director of Idea Cellular, speaks toSadananda Mohapatra. Edited excerpts:

Internet data charges are expected to d;rop with the emergence of large players such asReliance Jioand you have also announced to roll out4Gservices from 2016 onwards. Do you expect data charges to d;rop sharply with increased competition?
Pricing is an interplay of demand and supply. Most of us are expanding our supplies with the belief that demand will surpass supplies. Let us see what happens.

Competitive intensity usually results in price wars. Do you expect the same in data?
Telecom is an infrastructure-based industry and large outlays have happened in terms of spectrum auction payment and infrastructure set up. We are very confident that we will be able to get reasonable return on our investment.

Some of your competitors are expected to offer 4G services bundled with a compatible device. Is Idea also planning to do the same?
We have done that (bundling) before when we launched 3G. As we are getting ready to launch 4G services, it is important for us to make sure that affordable 4G handsets are available in the market. We are evaluating all options including working with device manufacturers and marketers so that subscribers can get 4G devices at affordable prices.

In the financial results, you have mentioned that the company will roll out its own range of digital services as part of expanding its value-added services. Can you elaborate on that?
As the demand grows, consumers are looking for more content and applications. We will be providing services in utility, information, entertainment segments as well as open our platform for start-up app creators, who will get an opportunity to market their product through us.