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Idea Cellular, in its earnings report for the quarter ending June 30th 2013, has said that its “non-data mobile VAS revenues” are under pressure from the “threat emerging from free messenger & chat ‘OTT’ applications/services”, as well as the institution of TRAI’s double confirmation regime, which is impacting all telecom companies, and has led to them increasing rates for VAS and also mobile data. Non-Data VAS as a percentage of revenues has declined to 7.4% of service revenues for the company, down 2.8%. What the company has not mentioned, is that it is these free OTT (Over the Top) applications are inherently linked to growing its Data VAS revenues, which is growing. In fact, ‘Value Added Services’ (VAS) has increased to 16.1% (15.6% in Q2FY13), improving overall ARPM.

Data revenues are 8.7% Service Revenue, up 3.3% year on year. Last quarter it was 7.2%, but keep in mind that Q2 is a slow quarter for telcos, in terms of overall revenue.
– 14.7 million connections added to mobile data usage on a yearly basis
33.6 million 2G+3G users
Data ARPU per data customer (2G + 3G): Rs 55, up from Rs 54 last quarter
178 MB blended per user data usage, up from 160 MB last quarter
– 17.5 billion MB data transfer during the quarter, up 99.6% from Q2FY13
Rs 0.31 per MB is the Average Realized Rate per MB, down from 0.335 per MB last quarter.

– 3G data subscribers: 6.2 million, up from 5.5 million last quarter
– 3G Data ARPU per data customer: Rs 116, up from Rs 109 last quarter
– 3G Data Usage: 429 mb per connection, up from 398 mb last quarter
– 3G Data volume: 7.5 billion MB last quarter, up from 6.3 billion MB
– 3G cell sites: 18,031 up from 17,481 last quarter

Operational Parameters

– Connection base grew to 127.2 million (2G+3G), up from 125 million in the previous quarter.
– Average Realised Rate per Minute (ARPM) improved to Rs 0.447 from Rs 0.437
– Average minutes of use declined to 368 per connection, down from 398 last quarter, and 406 the previous quarter.
– Prepaid subscribers: 95.8%, down from 96% of total subscriber base the previous quarter.
– Churn: 5.3% blended churn, up from 5.1%. Prepaid churn was 5.4% up from 4.3%; postpaid churn was 2.8%, down from 3.6%
– Minutes of Use: The total number of minutes on network increased to 138.827 billion, down from 147.3 billion.
– Idea’s Active Connection base went up by 7.8 million, down from 8.3 million additions the previous quarter.
– MNP: Idea claims a net gain of 7.3 million connections so far, via MNP (i.e. porting in minus porting out, until July 15, 2013)

In June 2013, Airtel and Idea Cellular have reportedly hiked 2G data rates, shortly after they had reduced them by 90% for both postpaid and prepaid subscribers in eight circles for 90 days.

Financials
18.1% on YoY basis to Rs. 63,170 million against Rs. 53,481 million revenue in Q2FY13.
Idea Cellular reported standalone revenues of Rs 6,317 crore, down from 6,535.5 crore for the previous quarter, but higher than Rs 5348.1 crore for the same quarter last year. Remember that Q2 is, seasonally, a weak quarter for telecom, and Idea says the situation has been impacted even more by the sharp contraction in minutes of use, due to a higher rural subscriber base than before. Minutes of use declined sequentially to 138.8 billion minutes, from 147.3 billion minutes last quarter.

The EBITDA margin was 27.6%, down from 28.2% reported last quarter, but up 4% from last year. Standalone PAT was Rs 398.5 crore, 13.2%
higher than Q2FY13 PAT of Rs 351.9 crore (which also included Rs 154.3 crore dividend from Indus). The company generated a cash profit of Rs 1455.6 crore, down from Rs 1743.8 crore last quarter.

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