Idea Cellular at new low

Increasing capital expenditure and falling data volumes impacted the earnings of Idea Cellular for Q1FY17. Its standalone net profit for the quarter dropped 36% (YoY) at Rs.497 crore on a 8% rise in revenue at Rs.9487 crore. This number includes the full impact of spectrum acquired by Idea in March 2015 (investment of Rs 30140 crore  and February 2014 auction (investment of Rs 10420  billion) for renewal of mobile licenses in nine service areas expired between December 2015 to April 2016 and spectrum acquired for 3G and 4G services in multiple circles.

EBITDA was up 3% at Rs.2979 crore and margins slumped from 33.9% to 32.4%. Another reason for the fall in earnings was a whopping 185% surge in interest outgo – its net debt currently stands at Rs.37,660 crore. Depreciation also showed 36% rise.

In terms of data, which contributes 21% to revenue, its average realized rate from data fell 8% (QoQ) but this fall in rates helped boost volumes, where Idea added 5 million mobile data users during the quarter; its highest ever and it currently has 49 million data subscribers. 

The market is naturally very disappointed with the numbers and the stock price hit a new 52-week low today at Rs.96.55.