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UBS Investment Research
Idea Cellular
F X and seasonality = Weak 2QFY12
Event: Big miss on net income due to FX loss and margin contraction
Idea Cellular 2QFY12 consolidated revenues at Rs46.2b came in largely inline
while EBITDA at Rs11.9b was below UBS-e (Rs12.4b) mainly due to higher
employee expenses and network expenses (from 3G roaming agreement). Net
income at Rs1.06b was below UBS-e (Rs1.73b) impacted by one-time FX loss of
Rs313m. Minutes generated declined by 2.2% in 2QFY12 vs. UBS-e of 2.1%
growth. The two bright spots in quarter were a) voice rev/min improved by 2.5% to
38p/min; b) Non voice rev contribution increased to 13.2% vs. 12.1% in 1QFY12.
Impact: Reducing our FY12E/FY13E estimates by 17.5%/8.1% resp
Taking in to account 2Q performance, we are reducing our FY12E/FY13E/FY14E
earning estimates by 17.5%/8.1%/6.8% resp as we reduce our subs addition and
minutes growth assumptions. We now expect FY12E/FY13E/FY14E total minute
on the network of 445b/516b/573b mins (vs. 463b/540b/601b mins earlier).
Action: Idea is still our top-pick in the sector
We reduce our PT for Idea to Rs120 (from Rs125 earlier) on the back of reduction
in earning estimates. Idea continues to be our top pick in the sector as we expect
company to benefit the most from improving pricing environment and regulatory
outlook given higher operating leverage.
Valuation: Maintain Buy rating with SoTP based PT of Rs120
We value Idea’s stake in Indus at Rs20 per share. We incorporate a charge of Rs25
on account of one time excess spectrum fee, present value of license renewal
payment and potential savings from reduction in license fees.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Idea Cellular
F X and seasonality = Weak 2QFY12
Event: Big miss on net income due to FX loss and margin contraction
Idea Cellular 2QFY12 consolidated revenues at Rs46.2b came in largely inline
while EBITDA at Rs11.9b was below UBS-e (Rs12.4b) mainly due to higher
employee expenses and network expenses (from 3G roaming agreement). Net
income at Rs1.06b was below UBS-e (Rs1.73b) impacted by one-time FX loss of
Rs313m. Minutes generated declined by 2.2% in 2QFY12 vs. UBS-e of 2.1%
growth. The two bright spots in quarter were a) voice rev/min improved by 2.5% to
38p/min; b) Non voice rev contribution increased to 13.2% vs. 12.1% in 1QFY12.
Impact: Reducing our FY12E/FY13E estimates by 17.5%/8.1% resp
Taking in to account 2Q performance, we are reducing our FY12E/FY13E/FY14E
earning estimates by 17.5%/8.1%/6.8% resp as we reduce our subs addition and
minutes growth assumptions. We now expect FY12E/FY13E/FY14E total minute
on the network of 445b/516b/573b mins (vs. 463b/540b/601b mins earlier).
Action: Idea is still our top-pick in the sector
We reduce our PT for Idea to Rs120 (from Rs125 earlier) on the back of reduction
in earning estimates. Idea continues to be our top pick in the sector as we expect
company to benefit the most from improving pricing environment and regulatory
outlook given higher operating leverage.
Valuation: Maintain Buy rating with SoTP based PT of Rs120
We value Idea’s stake in Indus at Rs20 per share. We incorporate a charge of Rs25
on account of one time excess spectrum fee, present value of license renewal
payment and potential savings from reduction in license fees.
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