Idea Cellular’s 1QFY09 EBITDA at Rs7.2bn was aided by strong elasticity which offset the decline in rev/min and the pressure on EBITDA margins, which were impacted by 130bps (Rs299m) due to 7 circles moving to 2% higher license fee from 1Q.
Consolidated net profit at INR 2.6 bn fell by 4.9% Q-o-Q, primarily on account of a 26.6% increase in net interest costs and higher tax rate. Net debt has increased sharply by 49.5% to INR 97.5 bn. Besides the company has also reported foreign Exchange loss amounting to INR 152 mn. Tax rate increased to 10.1% in Q1FY09 from 5.6% in Q4FY08.
Elasticity continues to remain strong for a 2nd quarter in a row (though lower than Bharti) with 5% jump in MoU (428 mins) as rev/min declined 7% qoq. Decline in rev/min was in line with what Bharti reported earlier. EBITDA losses in 3 circles widened, still to breakeven after 21 months since launch. We are not very bullish on Idea Cellular since it is not an integrated Telecom company like Bharti or RCom nor it has communicated its intentions to be so. Going forward the company will face stiff competition from new operators as idea is also fairly new in 6 to 8 circles.