Idea Cellular announces audited results for FY10 and for the quarter ended 31 March 2010
Idea Cellular posted a strong Q4 to finish yet another year of splendid performance, in the context of exacting sector conditions.
The number of operators jumped during the last 15 months, as licenses obtained during the telecom bubble days of 2007 converted into live operations. The consequent sector over-capacity and hyper-competition caused a year-on-year decline of 23 per cent in the average realised rate (ARR) for Idea, while general market rates plunged even deeper. To grab share, new launches offered subscriptions at throw-away prices loaded with free talk time. On one hand, this led to the use-and-throw phenomenon of new SIM cards. On the other hand, the paid revenue of yesteryear converted to unpaid revenue. Consequently, the national mobility sector revenue growth for the calendar year 2009 contracted to ~12 per cent (after normalisation for IUC), compared to the ~22 per cent growth in the earlier year. Conventional matrices like subscribers, ARPU (average revenue per user) etc became meaningless.
Idea’s results for FY10 are a portent for the sector. In a year characterised by the entry of hungry new operators, it would be expected that the incumbent would cede market share. Counter-intuitively, though not unexpectedly, during the calendar year 2009, Idea, in fact, increased its revenue market share from 11.4 per cent to 12.7 per cent (even in its 11 established service areas, the share increased from 17.5 per cent to 18.8 per cent).
| Highlights | |||
| FY10 over FY09 | |||
| Idea – Standalone 1 | Revenue up 21.8%; | EBITDA up 10.9%; | PAT up 7.7% |
| Idea – Consolidated 2 | Revenue up 22.6%; | EBITDA up 20.1%; | PAT up 8.2% |
| INR mn | ||||||||||
| Idea standalone1 | Idea consolidated 2 | |||||||||
| Pro-forma3 | Reported | Pro-forma6 | Reported | |||||||
| Q4 FY10 | Q4 FY10 | Q3 FY10 | FY10 | FY09 | Q4 FY10 | Q4 FY10 | Q3 FY10 | FY10 | FY09 | |
| Revenues – established services areas 4 | 29,242 | 30,250 | 28,226 | 113,019 | 98,133 | |||||
| Revenues – new services areas 5 | 2,761 | 2,761 | 2,384 | 8,394 | 1,581 | |||||
| Total revenue | 32,003 | 33,011 | 30,610 | 121,413 | 99,713 | 32,884 | 33,477 | 31,495 | 124,470 | 101,544 |
| EBITDA – established services areas 4 | 9,740 | 9,750 | 8,491 | 34,722 | 29,329 | |||||
| EBITDA – new services areas 5 | (1,422) | (1,422) | (1,288) | (4,184) | (1,781) | |||||
| Total EBITDA | 8,138 | 8,328 | 7,203 | 30,538 | 27,548 | 9,230 | 9,235 | 8,141 | 34,071 | 28,364 |
| EBITDA % | 26.0 | 25.2 | 23.5 | 25.2 | 27.6 | 28.1 | 27.6 | 25.8 | 27.4 | 27.9 |
| Depreciation and amortisation | 4,770 | 4,928 | 4,422 | 17,615 | 13,201 | 5,573 | 5,667 | 5,130 | 20,149 | 14,028 |
| Other income / receipt | - | 346 | - | 663 | 315 | 520 | - | 837 | ||
| EBIT | 3,548 | 3,745 | 2,781 | 13,586 | 14,347 | 3,972 | 4,088 | 3,011 | 14,578 | 14,336 |
| Interest and financing cost (Net) | 681 | 682 | 418 | 2,063 | 4,072 | 1,141 | 1,141 | 938 | 4,005 | 4,946 |
| PBT | 2,867 | 3,063 | 2,362 | 11,523 | 10,275 | 2,832 | 2,947 | 2,073 | 10,753 | 9,391 |
| PAT | 2,567 | 2,763 | 1,953 | 10,298 | 9,561 | 2,550 | 2,666 | 1,701 | 9,539 | 8,816 |
| Cash profit 5 | 7,648 | 7,657 | 6,986 | 29,044 | 23,518 | 8,417 | 8,106 | 7,404 | 30,636 | 23,457 |
Similarly, EBITDA margin even for the established service areas improved by 0.8 per cent to 30.7 per cent from 29.9 per cent compared to the previous year, notwithstanding the punishing 23 per cent drop in ARR. Idea has, in fact, grown EBITDA and PAT compared to the previous year, both on a standalone and consolidated basis, after further absorbing incremental EBITDA losses of Rs. 2,403 mn from the new service areas during FY10.
The one-time income, during the quarter, represents the impact of conversion of finance lease into operating lease in the service areas of erstwhile Spice.
Idea’s service area specific strategy, it’s improving capacity utilisation, its sophisticated management processes supported by a power brand, underscore Idea’s ability to ride out the rough times, and to emerge competitively enhanced once the phase of overcapacity and hyper-competition draws to its inevitable close.
Notes:
1. Idea standalone represents Idea, and its 100 per cent subsidiaries. Effectively, this encompasses all operations, excluding the JVs, Spice (till 28 February 2010) and Indus. Spice Communications has been merged into Idea Cellular w.e.f. 1 March 2010 and accordingly from that date Idea standalone includes Spice.
2. Idea Consolidated represents Idea, its 100 per cent subsidiaries, and its JVs, grouped together. In addition to Idea standalone, this covers the proportionate consolidation of Indus (16 per cent), and Spice (41.09 per cent, till 28 February 28 2010).
3. Standalone pro-forma figures exclude Spice circle results for March 2010. Consolidated pro-forma figures are derived assuming full quarter consolidation of Spice circles at 41.09 per cent. This is presented for the purpose of comparison with the previous quarter results.
4. Established service areas represent Maharashtra and Goa, Gujarat, Andhra Pradesh, Madhya Pradesh & Chhattisgarh, Delhi, Kerala, Haryana, Uttar Pradesh West and Uttaranchal, Uttar Pradesh East, Rajasthan and Himachal Pradesh service area, and also include the service areas of Punjab and Karnataka from 1 March 2010.
5. New service areas represent Mumbai, Bihar, Orissa, Tamil Nadu, J&K, Kolkata, West Bengal, Assam and the North East service areas.
6. Cash profit is calculated as summation of PAT, depreciation, charge on account of ESOPs and deferred tax, for the relevant period.
7. Figures of past periods have been regrouped, wherever necessary.
About Idea Cellular Ltd.
A leading GSM mobile services operator, Idea Cellular has operations in all 22 service areas of India. Idea is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India.
Idea is part of the Aditya Birla Group, India’s first truly multinational group. The group operates in 25 countries, is anchored by an extraordinary force of over 1,30,000 employees belonging to 30 nationalities, and derives over half of its revenues from operations outside India.
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