Idea Cellular posts Q1 profit of Rs 263 cr in June quarter; company gains from sale of mobile towers

New Delhi: In its last financial result before merger with Vodafone India, Aditya Birla Group firm Idea Cellular reported total comprehensive income of Rs 263.5 crore in the June quarter, mainly on account of one-time gain from the sale of mobile towers. Blows from turbulent tariff war were, however, visible on its operational performance. The company had posted a loss of Rs 816 crore in the same period a year ago. The sale of its mobile towers to American Tower Corporation in the reported quarter for Rs 3,364.5 crore, an exceptional item, rescued the company from posting another quarter of loss, it said in a statement. The company, however, registered a consolidated loss of Rs 2,757.6 crore before tax and exceptional items during the quarter.

“During the first quarter of the financial year 2019, Indian mobile industry continued to decline under pressure from heavily discounted unlimited voice and bundled data plans and subsidised 4G feature phone offerings from one of the operators, forcing a commensurate response from other existing mobile operators to retain subscribers,” Idea said in its report.

The consolidated revenue from operations of Idea dipped by around 28 per cent to Rs 5,889.2 crore during the first quarter of the current fiscal compared to Rs 8,166.5 crore in the same period last fiscal. [caption id=“attachment_4199981” align=“alignleft” width=“380”]  Representational image. Reuters.[/caption] The mobile services business plunged around 28 percent to Rs 5,745.3 crore from Rs 7,972.8 crore during the period under review. The impact of the tariff was reflected in a decline in average revenue. The revenue realisation from services almost halved on year-on-year (YoY) basis to 16.5 paise from 32 paise. Idea reported a slight dip in subscriber base to 187.9 million from 189 million on Y-o-Y basis. The average revenue per user of the company declined by 29 percent to Rs 100 from Rs 141 during the period under review. “While near-term challenges persist, long-term opportunities in the mobile sector continue to remain attractive. With the exit of sub-scale operators, consolidation of Industry structure is nearly complete…Once the current phase of below cost tariffs is over, it is inevitable that the industry ARPU will revive,” Idea said. Data usage on its network grew close to threefold but the average revenue realisation per megabyte dropped to 1.1 paise from 5.4 paise a year ago. Idea has now pinned hope in the operation of its merged business with Vodafone India, which has been approved by the government last week.

“The key focus area for the merged team will be to fast forward the substantial cost synergies with an estimated NPV (net present value) of about USD 10 billion and rapidly expand the broadband coverage and capacity by redeployment of overlapping equipment & refarming or consolidation of spectrum etc,” Idea said.

It said that both the companies already sharing nearly 66,000 sites. During the reported quarter, Idea invested Rs 980 crore on networks, majority of which was utilised for 4G expansion. The standalone net debt of the company stood at Rs 50,580.5 crore at the end of the reported quarter. On Monday, shares of Idea closed at Rs 58.45 per scrip, up 3.63 percent from the previous close at BSE.