Idea Cellular 2QFY11: Seasonally weak quarter :: UBS

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UBS Investment Research
Idea Cellular
2QFY11: Seasonally weak quarter
􀂄 Revenue and EBITDA below UBS estimates
Idea announced consolidated 2Q11 results: Revenues were flat qoq at Rs36.6bn
(UBS-e Rs38.0bn), EBITDA declined 1.1% qoq to Rs8.8bn (UBS-e Rs9.1bn) and
net profit declined 10.8% qoq to Rs1.8bn (UBS-e Rs1.7bn). Idea has achieved 48%
of our FY11 EBITDA estimate during 1HFY11.
􀂄 Rev/min declined by Rs0.01/min, mins on network grew 3.1% qoq
Total minutes on network (standalone) increased from 82.2bn mins in 1QFY11 to
84.8bn mins (+3.1% qoq) below UBS-e (87.3bn mins). Minutes per site increased
from 1.23m mins to 1.25 m mins. Mobile voice rev/min declined from Rs0.39/min
to Rs0.38/min (UBSe Rs0.38). Mobile EBITDA margin from initial 11 circles
declined 60bps qoq to 27.0%, while EBITDA losses from new launches remained
flat from Rs1.40bn in 1QFY11 to Rs1.43bn.
􀂄 Other results highlights
1) Idea has capitalised interest of Rs1.2bn relating to 3G debt in 2QFY11. Idea has
a net debt of Rs106.8bn as of September 2010 [Rs110.5bn in June 2010]. 2) Idea
guided for Rs40bn capex [stand-alone] in FY11 including 3G. 3) Indus Towers
contributed Rs1.2bn [13%] to consolidated EBITDA and Rs168m [9%] to
consolidated net profit.
􀂄 Valuation: Maintain Sell rating with SOTP based price target of Rs75