The continuing plunge of average realisation from its subscribers has hit India’s fifth largest telecom operator Idea Cellular hard, even as it has attained the status of a pan-India operator. It rolled out in J&K, West Bengal, Kolkata, Assam and North Eastern states during the quarter, adding 4889 cell sites during the quarter taking the total to 55,804; Spice and Idea combined now have 62,950 cell sites. Idea added 5.5 million connections in the December 2009 quarter, it now has 52.3 million subscribers while Spice has 5.3 million.

The flurry of pay per second tariff launches that happened in the second half of 2009 which Sanjeev Aga, MD, Idea Cellular had in the previous quarter dismissed as being ‘topical’ have adversely affected the company’s average realisation per minute which dove to 51 paise from the 64 paise recorded in December 2008.  Average revenue per user in December 2008 was at Rs. 268 – it has now dropped to an all time low of Rs. 200.

KPIs

Average minutes of use per user (MoU) has spiked in the December 2009 quarter, against the trend so far – from Rs. 399 in the July quarter, it had fallen to Rs. 375 but is now up to Rs. 389.  Total minutes of use has also increased by 14.9% quarter on quarter to  57,841 minutes, which still did not manage to buck up realisations with tariffs reaching rock bottom.

Details: Quarterly Report | Financials | Release

Financials

The contribution of VAS to revenues has climbed in the quarter from 10.6% to 11.2%. Consolidated profit after tax has reduced 22 percent sequentially and yearly to Rs. 1.7 billion due to losses incurred by Spice. Consolidated EBITDA is marginally down quarter on quarter to Rs. 8 billion with operational expenditure rising 8 percent quarter on quarter and 15 percent year on year to Rs. 2.3 billion.

On a standalone basis, Idea Cellular’s EBITDA margins have eroded to 23.5% from 25.3% in the previous quarter and profit before tax is down to Rs. 2.36 billion, a decline of  10 percent year on year. EBITDA is down 1.4 percent to Rs. 7.2 billion.

The company has a a net debt of Rs. 37,460 million against a net-worth of Rs 141,181 million as of December 2009, together with an average cash generation of around Rs. 7,000 million per quarter.

Market Share, Subscribers, Prepaid

Idea Cellular now operates in 20 of India’s 22 circles and has a 11% market share in them. The number of prepaid subscribers continues to rise – they now form 95.8% of its subscriber base, up from 94.3% in December 2008. Churn amongst prepaid subscribers has reached new levels, with the entry of new telcos Uninor and S Tel. It has jumped from 7.4% in September quarter to 9.4%; post paid churn is at 3.1%.

Bihar Circle To Be Merged With Idea

The judgement from the Bombay High Court on merging the telecom operations of Bihar Service Area (including Jharkhand) that are currently held by ABTL into Idea Cellular, is expected shortly.

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