Idea Cellular, the telecom arm of the Aditya Birla Group, saw its consolidated net profit decline by 12 per cent for the quarter ended June 2011.
The consolidated net profit after tax for the company stood at Rs 177.26 crore, a drop of Rs 24 crore from the corresponding quarter last fiscal.
On a standalone basis, the company's profit after tax fell by 21.5 per cent to Rs 154.1 crore (as of June 2011) from Rs 196.4 crore (as of June 2010).
The decline in profits was attributed to the expenditure on the introduction of 3G services by the company in this quarter. “With the introduction of 3G services in this quarter, additional expenses of amortisation of 3G spectrum fee (Rs 65.6 crore) and charging of related interest cost (Rs 122.8 crore) has impacted profits,” said the company in a press release. Idea Cellular rolled out its 3G services on March 28.
To reach 3,000 towns
The company attributed the growth in margins to better asset utilisation. “The growth in EBITDA margin was achieved in spite of higher network opex, by better cost management mainly related to lower subscriber acquisition, servicing, advertisement and business promotion expenses,” the press release said.
However, subscriber acquisition, servicing, advertisement and business promotion expenses have gone up by almost 30 per cent this quarter from the June 2010 quarter.
The company's existing subscriber base is 95 million. With the 3G expansion plans, it expects that 50 per cent of its existing subscriber base will be able to avail of its 3G services. “Our 3G services are currently present in 825 towns in 15 service areas. We are committed to reach 3,000 towns by the end of this financial year,” said Mr Himanshu Kapania, Managing Director, Idea Cellular.
The consolidated revenue of the company at the end of this June quarter stood at Rs 4,520.7 crore, up from Rs 3,653.7 crore at the end of the June 2010 quarter.
The net debt of the company currently stands at Rs 10,300 crore which is expected to go up to Rs 11,000 crore by the end of this fiscal, said Mr Kapania
The capex for this financial year for the company, as announced earlier, stands at Rs 4,000 crore of which Rs 1,000 crore has already been used , he added.
Call tariff hike
Idea Cellular has also increased tariffs on the per second billing plans by 20 per cent to 1.2 paise per second in six states which are the company's strongholds — Kerala, Maharashtra, Uttar Pradesh (west), Andhra Pradesh, Gujarat and Madhya Pradesh.
The stock price of Idea Cellular was up by 4.8 per cent (or Rs 4.35) per share on Friday. It ended the day at Rs 94.35, while touching a day's high of Rs 95.35, a 52-week high for the stock. The day's low was at Rs 87.80 a piece.