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Idea Cellular: ARPU At Rs 160; Profit Down 35.42% QoQ

The contribution of Mobile Value Added Services (including P2P SMS) to Idea Cellular‘s revenues has remained the same quarter on quarter at 12.1%, for the three month period ending 30th June 2011 (Q1-FY12), albeit much lower than the peak of 13% reported for Q3-FY11.

The company has also reported a marginal decline in its ARPU at Rs 160, from Rs 161 reported last quarter. This, perhaps, is due to an increase in two key factors:

– Minutes of Use: the total number of minutes on network increased to 108.63 billion from 101.96 billion: up 6.5% QoQ, and 32% year on year.
– Average Rate Realized: increased to Rs 0.410 from Rs 0.406, reversing a two year decline, even as the the cost per minute continued to decline. This, according to the company, resulted in expansion of margin between ARR and Cost/Minute to 8.9p compared to 8.0p in previous quarter.

Other Operational Stats
– Average minutes of use per customer declined to 391 minutes
– Connection base: grew to 95.1 million. By the time Idea cellular reports results for the current quarter, it should have crossed 100 million connections. – Prepaid subscribers: 96.5% of total, up from 96.4% from Q4-FY11
– Average Minutes of Use per user (MoU): 397, down from 401 last quarter
– Cell sites: EoP cell sites – 76,291, up from 73,668 at the end of the last quarter
– Minutes on Network increased by 9%, while Standalone Revenue expanded by 7%, on a sequential quarterly basis.
– MNP: Idea claims it had a net gain of over 930,000 subscribers (as on 24th July, 2011) and lowest port-out ratio of only 58 subscribers against every 100 subscribers

3G Rollout; Punjab Issue

Idea Celluar rolled out 6989 3G sites in its 9 3G service areas, during the quarter. Idea’s 3G service currency covers over 825 towns in 15 service areas, which includes bilateral roaming arrangement for the service areas of Mumbai, Bihar, Karnataka, Delhi, Kolkata and Tamil Nadu (Including Chennai). It plans to launch 3G in 3,000 towns across India by the end of this financial year, through a combination of home network and roaming arrangements.

The company has also said that even though it was allocated spectrum in the 3G spectrum auction for Punjab Service area, it is still waiting for the right for commercial use of the allotted 3G spectrum. The company has approached TDSAT for direction to DoT to allow commercial use of the allotted 3G spectrum band for Punjab service area.

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Sequentially, consolidated profit for Idea declined to Rs 177.26 crore from Rs 274.52 crore last quarter (albeit with a Rs 77.79 crore provision for taxation), while gross revenue increased to Rs 4520.72 crore from Rs 4234.7 crore last quarter. Mobility segment revenues were Rs 4484.31 crore, Long distance telephony revenues were Rs 64.59 crore and Passive Infrastructure revenues reported were Rs 334.45 crore.

On a standalone basis, profit after tax for the quarter stands at Rs 149.73 crore, down from Rs 257.6 crore last quarter. It reported revenues of Rs 4484.11 crore, up from Rs 4201.42 last quarter.

The company say it improved standalone EBITDA margin by 1.2% on a QoQ basis to 23.4%, primarily driven by the strong performance in Established Service Areas, helping it to absorb the higher losses from New Service Areas. With the introduction of 3G services in this quarter, additional expenses of amortisation of 3G spectrum fee (Rs. 65.6 crore) and charging of related interest cost (Rs. 122.8 crore) has impacted the profits.

The Net Debt for the company stands at Rs. 10,380 crore as on 30th June, 2011, and the Net Debt – Equity ratio is at 0.83.

Downloads: Media Release | Financials | Quarterly Rerport

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Spice-Idea Cellular Merger Case

The erstwhile Spice Communications Limited (Spice) was amalgamated with the Company effective 1st March 2010 pursuant to sanction of the Scheme of Amalgamation by Hon’ble High Court of Gujarat and Hon’ble High Court of Delhi. However, upon an application made by DoT on 30th March 2011 for recall of the order dated 5th February 2010, sanctioning the above scheme, the Hon’ble High Court of Delhi while pronouncing its judgment on 4th July 2011, reaffirmed the amalgamation of Spice with the Company. However, the said judgment transferred and vested unto the DoT, the six licenses granted to erstwhile Spice along with the spectrum (including the two operational licenses for Punjab & Karnataka service areas), till the time permission of DoT is granted for transfer thereof upon an application from the Company to that effect.

The Company then filed an appeal, before the Appellate Bench of the Hon’ble High Court of Delhi, challenging the above judgment of 4th July 2011. Through interim orders, Appellate Bench has directed DoT to :-

(i) Accept the License Fee from the Company without prejudice, as the Company is continuing to operate the licenses for Punjab & Karnataka service areas granted to erstwhile Spice;
(ii) Till the next date of hearing maintain status quo in relation to the aforesaid two operating licenses and no coercive steps in relation to any demand pertaining to the four non operating licenses.

Pending the final disposal of the appeal, the consequential financial impact, if any, cannot be

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