K.Venkatasubramanian

BL Research Bureau Idea Cellular has delivered a good set of numbers in FY08, with revenues growing 53.6 per cent and net profit more than doubling.

Strong subscriber additions, declining losses for three relatively new circles, and improving ‘minutes of usage’ are some of the positives over the past year.

Licence wins in nine new circles have given Idea a national footprint as well. The company has managed to ramp up monthly subscriber additions from 6-7 lakh to an average of one million over the past two quarters, gaining in the process a 16.8-per cent market share. In its eight older circles, Idea has a healthy operating profit margin of 36.8 per cent. The average revenue per user (ARPU) for the year has fallen 9.4 per cent to Rs 287, reflecting an industry-wide trend. The minutes of usage has increased 6.2 per cent to 411 during the year.

In the three new circles — Himachal Pradesh, Uttar Pradesh (East) and Rajasthan — Idea expects to become EBITDA-(operating profit) positive by mid-2008, instead of this quarter as originally expected. Margins have shown improvement.

Idea has bagged 4.4 MHz of spectrum to commence operations in Mumbai, Tamil Nadu (including Chennai) and Bihar circles. Mumbai is the highest ARPU-generating circle in the country along with Delhi and can peg up realisations. Penetrating Mumbai and Chennai may not be easy, with six operators already present. But the tower infrastructure offered by Indus Towers may reduce costs and time involved in the rollout. Mumbai operations are expected to commence in the July-September quarter.

Despite slower profit growth in the March quarter, expected forays into the high ARPU Mumbai and Tamil Nadu circles and cost savings from shared tower infrastructure, may help sustain high growth rates.

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