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UBS Investment Research
Idea Cellular
4QFY11 - Strong end to the year
„ Event: 4QFY11 results: Revenue & Net income in-line; EBITDA ahead
Idea Cellular 4QFY11 consolidated revenues at Rs42.3b came in largely inline
while EBITDA at Rs10.8b was ahead of UBS-e (Rs10.2bn). The EBITDA margins
at 25.4% were ahead of UBS-e 23.8% on the back lower losses from newer service
areas and improvement in margins in the established service areas. Net income at
Rs2.7bn was inline with UBS-e. The minutes growth came in strong at 9.0% qoq
vs. UBS-e 9.8% while voice rev per min. declined by 0.6% vs. UBS-e 2.7%. Nonvoice revenue as % of total revenue declined to 12.1% vs. 13.0% in 3Q.
„ Impact: Raising our FY12E/FY13E estimates by 7.9%/5.1% respectively
We increase our FY12E/FY13E earnings estimates by 7.9%/5.1% driven by
improvement in EBITDA margins in 4QFY11. We now expect consolidated
FY12E/FY13E EBITDA margins of 24.9%/25.7% vs. 23.9%/24.8% earlier. Also,
the company has guided for FY12E capex of Rs40bn inline with UBS-e.
„ Action: Idea is our top pick in the Indian mobile sector
Idea continues to outperform its peers both in terms revenue and earnings growth.
Further, we expect Idea to benefit the most from improvement in regulatory
environment and potential consolidation in the sector given it’s a pure play on
Indian mobile sector.
„ Valuation: Maintain Buy rating; Reduce SoTP based PT to Rs100
We reduce our PT to Rs100 from of Rs105 as we factor in impact of 2G license
renewal fess and potential savings from uniform license fees. We were earlier only
factoring in one-time excess spectrum payment fees
Q Idea Cellular
Idea Cellular is a GSM mobile operator in India with a nationwide subscriber
base of 43.0m (including Spice) for a market share of 11.1% as of March 2009.
The company operates in 16 of 22 service areas in India and has access to 900
MHz spectrum in nine of 16 service areas. The company is part of the Aditya
Birla Group.
Q Statement of Risk
Irrational competition among operators presents the biggest industry specific
risk factor for Idea Cellular. In terms of company-specific risks, we identify the
following: new circle strategies, and Idea’s ability to scale up to meet
burgeoning demand in the Indian mobile sector.
There is low visibility for capex associated with the new circles as it will depend
on the amount of spectrum allocated as well as which circles are likely to be
allocated spectrum.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Idea Cellular
4QFY11 - Strong end to the year
„ Event: 4QFY11 results: Revenue & Net income in-line; EBITDA ahead
Idea Cellular 4QFY11 consolidated revenues at Rs42.3b came in largely inline
while EBITDA at Rs10.8b was ahead of UBS-e (Rs10.2bn). The EBITDA margins
at 25.4% were ahead of UBS-e 23.8% on the back lower losses from newer service
areas and improvement in margins in the established service areas. Net income at
Rs2.7bn was inline with UBS-e. The minutes growth came in strong at 9.0% qoq
vs. UBS-e 9.8% while voice rev per min. declined by 0.6% vs. UBS-e 2.7%. Nonvoice revenue as % of total revenue declined to 12.1% vs. 13.0% in 3Q.
„ Impact: Raising our FY12E/FY13E estimates by 7.9%/5.1% respectively
We increase our FY12E/FY13E earnings estimates by 7.9%/5.1% driven by
improvement in EBITDA margins in 4QFY11. We now expect consolidated
FY12E/FY13E EBITDA margins of 24.9%/25.7% vs. 23.9%/24.8% earlier. Also,
the company has guided for FY12E capex of Rs40bn inline with UBS-e.
„ Action: Idea is our top pick in the Indian mobile sector
Idea continues to outperform its peers both in terms revenue and earnings growth.
Further, we expect Idea to benefit the most from improvement in regulatory
environment and potential consolidation in the sector given it’s a pure play on
Indian mobile sector.
„ Valuation: Maintain Buy rating; Reduce SoTP based PT to Rs100
We reduce our PT to Rs100 from of Rs105 as we factor in impact of 2G license
renewal fess and potential savings from uniform license fees. We were earlier only
factoring in one-time excess spectrum payment fees
Q Idea Cellular
Idea Cellular is a GSM mobile operator in India with a nationwide subscriber
base of 43.0m (including Spice) for a market share of 11.1% as of March 2009.
The company operates in 16 of 22 service areas in India and has access to 900
MHz spectrum in nine of 16 service areas. The company is part of the Aditya
Birla Group.
Q Statement of Risk
Irrational competition among operators presents the biggest industry specific
risk factor for Idea Cellular. In terms of company-specific risks, we identify the
following: new circle strategies, and Idea’s ability to scale up to meet
burgeoning demand in the Indian mobile sector.
There is low visibility for capex associated with the new circles as it will depend
on the amount of spectrum allocated as well as which circles are likely to be
allocated spectrum.
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