Idea defends its negative revenue in Q4, blames it on changes in TRAI interconnection regulation

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Idea's gross revenue both for the quarter Q4FY15 and for FY15 is negatively impacted by ~Rs. 1050 million and cites its due to the changes in the TRAI Interconnect (IUC) regulations (Amendment XIth and XIIth) effective March 01, 2015, though the impact on EBITDA is minimal. Idea continues its enviable track record of being amongst the fastest growing large Indian Mobile operators with 19.1% growth in gross revenue in FY15 at Rs. 3,15,548 million, nearly 1.8 times the wireless industry revenue growth rate (CY14).


Idea further revised Mobile Data Subscriber definition, eliminating from its reporting all incidental data users of less than 10 Megabytes/Month. The Mobile data user (2G+3G) penetration in overall base is now 21.2% at 33.4 million data subscribers with blended Mobile data ARPU (2G+3G) at Rs. 150 in Q4FY15 (v/s Rs. 104 in Q4FY14). The data ‘Average Realisation Per MB’ (ARMB) has remained largely flat at 25.7p/minute 25.3p/minute in Q4FY14).

The company doubled its 3G data subscriber base, adding 7.3 million new 3G users in last one year, servicing overall 14.5 million 3G data consumers. During the year, 3G Data volume exploded by nearly 2.3 times; from 13.1 billion Megabyte in Q4FY14 to 30.7 billion Megabyte in Q4FY15. To support the exponential Voice and Mobile Data growth, Idea capex spend for FY15 is Rs. 40.5 billion (excluding spectrum); adding 7,589 GSM sites and 8,910 3G cell sites and over 11,000 Km of high capacity optical fibre.


Inspite of TRAI reducing the Termination Charge from earlier 20p/minute to 14p/minute from other telecom operators (and no IUC charge on the calls originating or terminating to Wireline networks), the sequential quarterly revenue has grown by 5% in Q4FY15 (normalized QoQ revenue growth of 6.3%) driven by a) 9.2 million Active Subscriber addition (VLR Adds), b) sharp expansion of voice minutes @8.4% to 185 billion minutes and c) 18.3% Mobile data volume (2G+3G) growth to 54.5 billion Megabytes v/s Q3FY15; a clear testimony of strong consumer demand for Idea Mobile services.

Inspite of higher network expansion and cost inflationary pressures, Idea standalone EBITDA grew faster in FY15 at 33% and stands at Rs. 97,679 million, helping margin improve by 3.2% to 31%. Similarly, the strong revenue growth this quarter translated into Q4FY15 standalone EBITDA margin improvement of 2.1% at 33.1% (vs Q3FY15) and sequential quarterly growth of 11.9%.

The double bottom line drivers of Voice and Data business, scale benefits and optimization of cost has helped Idea improve its standalone Profit After Tax (PAT) by 93.9% from Rs. 17,932 million (Incl. Indus dividend of Rs. 838 million) in FY14 to Rs. 34,772 million (Incl. Indus dividend of Rs. 6,250 million) this financial year. At consolidated level including Indus contribution of 16%, the company revenue in FY15 has grown by 19.1%, consolidated annual EBITDA grew by 30.4% to Rs. 108,118 million, EBITDA margin improved to 34.2% and annual PAT is at Rs. 31,929 million, an annual growth of 62.3%.

Additionally, the company has acquired spectrum and the ability to launch 4G services on 1800 MHz spectrum in service areas of Tamil Nadu (incl. Chennai) and Orissa, expanding Idea 4G 1800 MHz contiguous spectrum footprint to 10 service areas covering most of its strategic markets with ability to offer LTE services to 61% of Idea existing revenue. In March 2015 auction, on overall basis, Idea has won 54 MHz of efficient 900 MHz band, 20.4 MHz in 1800 MHz band and 5 MHz in 2100 MHz band, a total quantum of 79.4 MHz spectrum, across 14 circles for a total bid value of Rs. 301,375 million. The company has opted for DoT’s deferred payment option. The company has made upfront payment of Rs.77,342 million including payment of Rs. 19,350 million on March 31, 2015 and the remaining amount on April 09, 2015.

As mobility market services expand, Indian Telecom business offers exciting growth opportunities in Mobile broadband & rural voice telephony. Brand Idea with growing consumer affinity, strong cash flows, expanding 2G & 3G network footprint, competitive & multiband spectrum profile; reaffirms its ability to strengthen its market position and improve presence across new and emerging opportunities.

Reported By

Telecom Analyst

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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