Idea's quarterly profit doubles as mobile market recovers

NEW DELHI/MUMBAI Mon Jan 27, 2014 7:47pm IST

Related Topics

Stocks

   

NEW DELHI/MUMBAI (Reuters) - Idea Cellular Ltd's(IDEA.NS) quarterly net profit doubled as it benefited from reduced competition and an increase in voice call prices in the world's second-biggest mobile phone market, but missed analysts' estimates.

India's No.3 cellular carrier by revenue and customers reported that consolidated net profit surged to 4.68 billion rupees for its fiscal third quarter ended December, it said on Monday.

Analysts had on average expected Idea to report a net profit of 5.13 billion rupees, according to data compiled by Thomson Reuters StarMine.

"The voice market continues to do well," Managing Director Himanshu Kapania said at a news conference after the results.

He said there was high competition in mobile data, resulting in lower margins from the segment. Carriers in India get more than 80 percent of revenue from the voice market, but mobile data services are growing faster as 3G networks expand.

Leading carriers including Bharti Airtel (BRTI.NS), Vodafone India (VOD.L) and Idea last year raised voice call prices after a years-long price war and continue to cut discounts after a court order forced some smaller companies to shut down or scale back, helping reduce competition.

Idea, part of the Aditya Birla conglomerate, is favoured by some investors because of its focus on mobile services and the domestic market and it has lower debt compared with its rivals. But it faces a tough challenge from Bharti and Vodafone India, which are much bigger by revenue.

Idea, which is about a fifth-owned by Malaysia's Axiata (AXIA.KL), has applied to bid in a mobile phone spectrum auction starting February 3 and is expected to buy airwaves to roll out 3G services in areas where it does not have the capability.

High spending in the spectrum auction, which has seen interest from eight companies including the leading mobile carriers and cash-rich conglomerate Reliance Industries (RELI.NS), is a risk for the carriers who will most likely fund it by taking more debt.

IN-LINE REVENUE

Idea, the first telecom carrier to report results for the December quarter, said revenue for the quarter rose 19 percent to 66.13 billion rupees, in line with estimates. Analysts on average had expected revenue of 66.1 billion rupees.

Average revenue per user, a key operating metric for phone carriers, rose 3 percent from the previous quarter to 169 rupees, said Idea, which had 129 million customers as of December. Average realisation per minute grew to 0.449 rupees from 0.447 rupees a quarter earlier.

Shares in Idea, valued at about $8 billion, closed 5 percent lower ahead of the results, against a 2 percent fall in the broader Nifty. Both Idea and Bharti Airtel have underperformed the broader market this month, due to worries of fierce bidding in the mobile phone spectrum auction.

(Editing Matt Driskill and Pravin Char)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Popularity Poll

REUTERS SHOWCASE

Record Highs

Record Highs

Nifty touches record high; software stocks gain.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

Pricing Mechanism

Pricing Mechanism

Govt sets up a four-member panel to re-examine gas pricing.  Full Article 

Royalty Rates

Royalty Rates

India to hike iron ore royalty, miners may struggle to pass on extra cost.  Full Article 

Diesel Deregulation

Diesel Deregulation

Oil ministry to seek Cabinet nod on diesel deregulation - sources  Full Article 

Commodities

Commodities

Gold near two-month low; set for weekly drop on interest rate fears  Full Article 

Reuters Exclusive

Reuters Exclusive

Apple iPhone 6 screen snag leaves supply chain scrambling   Full Article 

Helping Regional Mills

Helping Regional Mills

Govt raises sugar import duty to 25 pct from 15 pct.  Full Article 

Curbing Risks

Curbing Risks

RBI to lower ceiling on bank loans to a single corporate group.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage