Idea Cellular Ltd.|Q2FY15 Result Update | Above expectation performance: Upgraded to HOLD with TP of Rs.165 :: IndiaNivesh

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Idea Cellular Ltd (Idea) Q2FY15 result was above our expectations from all front.
Top-line grew by 19.7% Y/Y (0.1% Q/Q) to Rs 75.7bn against INSPL est of Rs.74.1bn.
The revenue growth was led by 17.0% Y/Y (down 1.7% Q/Q) increase in total
volume minutes and 12.9% Y/Y (+3.3 Q/Q) increase in subscriber addition. During
the quarter, minutes of usage per user per month (MoU) increased 4.3% Y/Y (down
4.2% Q/Q) to 384 mints (v/s 368 mints in Q2FY14 and 401 mints in Q1FY15).
Average revenue per user (APRU) went-up 7.3% Y/Y (down 2.8% Q/Q) to Rs.176
(v/s Rs.164 in Q2FY14 and Rs.181 in Q1FY15). ARPM went-up to 45.9 paisa (v/s
44.7 paisa in Q2FY14 and 45.1 paisa in Q1FY15). EBITDA stood at Rs24.9bn (INSPL
est: Rs24.1bn), Up 26.3% Y/Y (down 0.5% Q/Q) on account of higher revenue
base. As a result, consolidated EBITDA margin expanded 172bps Y/Y (down 21
bps Q/Q) to 32.9% (v/s 31.2% in Q2FY14). PAT for quarter stood at Rs.7.6 bn (INSPL
est. Rs.7.1 bn), up 68.9% Y/Y/3.8% Q/Q, owing to higher EBITDA base. During the
quarter, Idea reported higher other income of Rs.1139 mn (v/s Rs.619 mn in Q2FY14
and Rs.290 mn in Q1FY15). After adjusting other income, net profit stood at
Rs. 6.4 bn, Up 66.5% Y/Y (down 8.2% Q/Q) relative to Rs.3.9 bn in Q2FY14.
Key Results Takeaway
Operating KPI’s Update…
 Idea registered increase in subscriber base by 5 mn resulting in total subscriber
base of 144 mn (up 12.9% Y/Y). Voice volume grew by 7.3% Y/Y to 176 bn
minutes (v/s 164 bn minutes in Q2FY14). However, on the sequential basis
voice volume declined 1.7% y/y due to seasonal weakness. MoU/sub increased
at 384 minutes relative to 368 minutes in Q2FY14, but down as compare to
401 minutes in Q1FY15. Blended churn rate reduced on y-o-y basis to 5.0%
from 5.3% in Q2FY14; however inched-up martially on sequential basis (4.6%
in Q1FY15). During the quarter post-paid churn rate stood at 2.7% [v/s 4.9%
in Q1FY15 and 2.8% in Q2FY14] and pre-paid churn rate was at 5.1% [v/s
4.6% in Q1FY15 and 5.4% in Q2FY14]. ARPU increased to Rs.176 v/s Rs.164 in
Q2FY14 (down of Q/Q basis – Rs.181 in Q1FY15). Average revenue per minutes
(ARPM) increased 2.7% Y/Y/1.8%Q/Q to 45.9 paisa due to increase in VAS
revenue. Idea remains the key gainer in MNP with net gain of 10.8 mn
subscribers. Idea VLR subscribers (active subscribers) remain highest in the
industry at 101.3% (to 144 mn subscribers) of total subscriber base.
 The share of VAS (non-voice) revenues went up to 21.1% (v/s 17.8% in Q1FY15
and 16.1% in Q2FY14) of total revenue. Total data subscribers decreased
8.0%Y/Y to 30.9 mn [v/s 33.6 mn in Q2FY14]. Sequentially, data subscribers
increased 11.0% to 30.9 mn [v/s 27.9 mn in Q1FY15]. Average revenue per
megabytes (ARMB) stood at 26.5 paisa (v/s 26.3 paisa in Q1FY15 and 31.0
paisa in Q2FY14). The company reported data ARPU of Rs.119 (v/s Rs.108 in
Q1FY15 and Rs.55 in Q2FY14). Data contribution to the total services revenue
stood at 14.0% [v/s 11.5% in Q1FY15 and 8.7% in Q2FY14].

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