Idea Cellular, India's third largest telco, kick-started the fourth quarter earnings on an upbeat note, as it reported a 91% jump in net profit at Rs 589 crore in the January-March quarter compared with Rs 308 crore in the corresponding quarter last year, on the back of higher data and voice revenues, subscriber additions and value-added services.
Consolidated revenue during the fourth quarter increased about 16% to Rs 7,043.8 crore as compared with Rs 6,061.4 crore in the corresponding quarter previous fiscal year – double the industry growth rate. PAT also grew from Rs 1,008 crore in FY13 to Rs 1,793 crore in FY14.
Idea Cellular also saw the highest visitor location register or VLR subscriber additions in the quarter at 17.7 million, as against 14.9 million in the previous fiscal taking the total subscriber base to 137.9 million as of March 31. Of this, the company added 5.1 million 3G subscribers in FY14, taking total 3G subscriber base to 10.2 million. Subscriber churn also declined in the quarter to 4.2% from 7.8% in the previous quarter.
Average revenue per user (ARPU) rose to Rs 173 during the fourth quarter from Rs 169 in the previous quarter. Data ARPU improved to Rs 104, with 3G ARPU at Rs 111. Minutes of usage also increased by 8.6% qoq to Rs 157.1 billion minutes and data volume growth increased by 31% qoq to 27.3 billion MB. Idea Cellular's revenue from non-voice services improved to 16.5% of its total revenue during the fourth quarter as compared with 16.1% during the previous quarter, backed by growth in data volume. Data revenues thus contributed to 10.1% of overall service revenue, an increase of 3.5% yoy. Further, revenue market share grew by 16.1% - an improvement of 1.3% qoq.
However, average realisation rate per minute fell by 2.8% qoq to 43.6 paise from 44.9 paisa, and average realisation per MB (ARMB) also fell sharply by 4.3 paise qoq to 25.3 paisa on account of cut-throat competition.
Commenting on capex investment, Himanshu Kapania, MD and CEO, Idea Cellular, said, "We have made the largest capex investment this year of Rs 3,479 crore in equipment, and Rs 10,424 crore towards spectrum – a total of Rs 13,900 crore, which is financed largely through our cash profit."
He continued, "Our average revenue rate decline of 2.9% is on account of new circles acquired in 2012, which are yet to provide optimum market share and this time our data volume growth was largely led by North and Eastern circles, which are traditionally low revenue areas, but we believe this is a one-quarter phenomenon.
Kapania also said Idea had a flat forex impact due to hedges of Rs 7,000 crore in foreign debt and was fully hedged for all payments due for the next four years, and would not be taking on any more debt on account of being free cash flow positive now.
He further added that Idea was expanding its 3G circles from 10 to 12, and added 14,800 new GSM cell sites, a portion of which went to new service areas, which still have a negative growth rate of 45.2% in the quarter against a negative growth rate of 47.5% in the last quarter.
Idea Cellular also reported an EBITA (earnings before interest, taxes, depreciation, and amortization) margin increase to 31.7% in the December quarter as compared to 31.1% yoy.
However, the company's net debt has more than doubled (an increase of 114%) in FY14 to Rs 19,185 crore, as compared with Rs 8,945 crore reported in the previous quarter, on account of spectrum payment outgo. Of the overall payment of Rs 10,424 crore towards the spectrum payment, the company paid Rs 7,280 crore as part of government deferred payment liability and Rs 3,143 crore as upfront spectrum payment.
Idea Cellular has recommended a dividend of 4%, an overall payment of Rs 155 crore to shareholders.