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:

REUTERS SHOWCASE

Oil Prices Fall

Oil Prices Fall

Brent near four-year low after OPEC decides against output cut  Full Article 

Banking Sector

Banking Sector

India says considering plan to reduce stake to 52 pct in state banks   Full Article 

Islamic Fund

Islamic Fund

India gets new Islamic equity fund but debt market still off-limits  Full Article 

Fiscal Deficit

Fiscal Deficit

April-October fiscal deficit nears 90 pct of full-year target  Full Article 

SAARC Summit

SAARC Summit

Summit salvaged after handshake by leaders of India, Pakistan  Full Article 

Social Media

Social Media

Twitter to start tracking users' mobile apps  Full Article 

Forever21 in India

Forever21 in India

Forever21 sets sights on Indian cities, but please hold the hot pants  Full Article 

Japan Economy

Japan Economy

Japan inflation slows in October, output and spending show signs of recovery  Full Article 

Reuters India Mobile

Reuters India Mobile

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