Idea Cellular Surprises With Q1 Net Profit of Rs.256.5 Crore; ARPU Down to Rs.100

Idea has reported exceptional results with a profit of 256.5 crores in the previous quarter compared to the losses they had reported in the March quarter. It must be noted that in the March quarter, the company had reported losses of 962.2 crores.

This profit is also reported to be due to one time gain on sale to ACT Fibernet of its entire shareholdings of Idea Cellular infrastructure services.

Idea’s Revenue Figures:

However, revenue of the company was down by 4% at Rs 5889.2 crores compared to Rs 6137.3 crores previously. The losses after tax and other items were at Rs 2757.6 crores.

The EBITDA margin fell to 54.4% and the margin was down at 11.2%. The ARPU (Average Revenue Per User) was Rs 100 compared to RS 105 previously in Q4 of FY 18.

Vodafone-Idea vs Other Telecom Companies:

With the merger of Idea and the Indian arm of UK’s Vodafone, India sees a tough competition between just three telecom players – Bharti Airtel, Idea-Vodafone and Reliance Jio. The others like Aircel and Telenor have fallen along the way, and these three stalwarts are now in direct competition vying for the immensely huge Indian market.

Idea Cellular’s representative said in a regulatory filing on Friday that, “The merger is now subject to National Company Law Tribunal, Mumbai Bench, passing the dissolution order of VMSL and VIL, which is expected shortly.”

The merged company will have Kumar Mangalam Birla at the helm as the Non-Executive Chairman whereas the Chief Executive will be Balesh Sharma, who is also the current Chief Operating Officer of Vodafone India.

The Market Figures:

Airtel leads the way with 1.13 billion subscribers with 34.5% share alone in the market, followed by Idea-Vodafone with 400 million subscribers with a 40% market share and Reliance Jio just a tad little behind with 206 million subscribers with an 18% market share (although it doesn’t have much investment in the wireless spectrum yet).

The framework has also clearly shifted from voice to data services. When Jio entered the market, the valuation of Idea was just short of Rs. 24,600 crore, while having lost 30% of its market cap, but being at Rs. 72,200 crores after the merger. Bharti’s current value is Rs. 1,42,000 crore, still almost double than that of Idea Cellular. However, with the Idea-Vodafone merger, the total reached Rs. 1,57,000 crore, more than Airtel’s. Though, with regulations, one is still not sure how the market will work going forward. Idea and Vodafone though have spent a lot on spectrum looking to a savings of Rs. 14,000 crore at the end of a four year period.

Broadband Services:

One-third of India’s telecom market is the broadband services growing at a 3.5 per cent rate with Reliance Jio having 44% of the market share. Idea-Vodafone’s market share in this space is about 21% while Airtel having the share close to 19.5%. In the ARPU game, Airtel has a strategic tie-up with Star TV’s Hotstar; Reliance Jio with Saavn, Network 18 media entities and a video entertainment investment in ALTBalaji; whereas Idea-Vodafone is starting in digital content with movies, music and magazines.

While there are chances of Bharti and Idea-Vodafone consolidating their two mobile tower businesses – Bharti Infratel and Indus Towers, it is no wonder that Idea-Vodafone can still go on to shed more weight and turn nimble to capture a greater market share in the near future.

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