Interest costs take toll as Idea Q4 net profit falls 13 pct
MUMBAI/NEW DELHI (Reuters) - Idea Cellular reported a fourth straight quarter of declining profit as interest costs jumped, and warned of an uncertain regulatory environment in the world's second-biggest mobile phone market.
India's third-largest mobile phone carrier by revenue said consolidated net profit fell 13 percent in its fiscal fourth quarter ended March, in line with estimates, due to a one-off provision and a near-trebling in interest costs on loans.
Mobile phone carriers in India have been hit by fresh uncertainty in recent months after a court order to revoke all cellular permits granted in a scandal-tainted 2008 sale.
Part of the Aditya Birla conglomerate, Idea is set to lose seven of its 22 zonal operative licences.
It must win those back in an auction to retain its all-India presence and compete with bigger rivals Bharti Airtel and Vodafone's local unit.
But with the sector regulator proposing the auction has a starting level of nearly 10 times the 2008 sale price, Idea may have to spend at least 25.35 billion rupees to regain the permits.
"There is no doubt our investors are nervous," Idea Chief Executive Himanshu Kapania told reporters at a news conference.
The regulator's proposals must be approved by the government before they become law.
Idea plans 35 billion rupees in capital expenditure in the year to next March, excluding any auction payments, f inance chief Akshaya Moondra said.
Shares in Idea, valued at $5.2 billion, closed 4.1 percent higher at 83.35 rupees in a Mumbai market that fell 0.3 percent before the earnings announcement.
Idea shares are down more than 15 percent this month and fell sharply this week after the regulator's proposals were announced. The shares had gained 20 percent over the three months to March, outperforming Bharti and the broader market.
Net profit fell to 2.39 billion rupees for the three months to March from 2.75 billion a year earlier. Revenue rose some 27 percent to 53.7 billion rupees, as the number of customers grew by more than a quarter.
Analysts in a Reuters poll of 19 brokerages had on average expected a net profit of 2.41 billion rupees on revenue of 53.04 billion for the company, of which Malaysia's Axiata owns about one-fifth.
Interest costs jumped to 2.28 billion rupees from 854 million in the year-ago quarter mainly because of loans for building a third-generation network.
Idea spent 57.69 billion rupees in a 2010 state auction to buy 3G spectrum and has invested in building the network.
The company also made a provision of 1.5 billion rupees in the quarterly result due to an "uncertain regulatory environment", Moondra said, without elaborating.
(Reporting by Aradhana Aravindan and Devidutta Tripathy; editing by Malini Menon and David Hulmes)
- Tweet this
- Share this
- Digg this
India could allow commercial coal mining by foreign companies if they set up units in the country, opening the door for global giants like Rio Tinto to access the world's fifth largest coal reserves, a source familiar with the matter said. Full Article