31-05-2013, 12:24 PM
IDEA CELLULAR LTD
IDEA CELLULAR.ppt (Size: 299 KB / Downloads: 124)
Company Outlook
Idea Cellular is a part of the US $24 billion Aditya Birla Group and a leading
GSM mobile services operator with licenses to operate in 13 telecom service
areas in India. The company has operations in Delhi, Himachal Pradesh,
Rajasthan, Haryana, Uttar Pradesh (W) & Uttaranchal, Uttar Pradesh (E), Madhya
Pradesh & Chattisgarh, Gujarat, Maharashtra & Goa, Andhra Pradesh and Kerala. With
the planned expansion into Mumbai, Bihar & Jharkhand,
Idea’s footprint will cover nearly 70 percent of India’s telephony potential. Idea
Cellular had 16.13 Million subscribers as on June 30, 2007, and had a market share of
15.4 percent as on June 30, 2007 in its 11 service areas of operation. We think idea
looks impressive due to the following reasons:-
Business Summary
Higher subscriber addition
We expect that the company will see a robust growth in its subscriber base in the coming months in both new as well as existing circles. Moreover it is expected to be allotted spectrum in Mumbai in the coming months.
Improvement in EBITDA margins
The EBITDA margins are expected to improve both in the existing and the new circles. As more and more subscribers will be added and company will enter into new circles, revenue flow will also be higher.
Hiving off tower business
Following the footsteps of Bharti and RCom, Idea Cellular has also decided to hive off its tower business into an independent subsidiary. The Board of Directors (BoD) has approved the demerger plan. So value unlocking is on the cards.
Aggressive method of recognizing revenue
Idea recognizes entire processing charge from Lifetime prepaid schemes as revenue upfront, while RCom and Bharti amortize the same over 48 months and 24 months, respectively. Thus, Idea’s ARPU, revenues and margins, to that extent are inflated. In Q1FY08 more than 30 percent of net additions were from new lifetime prepaid scheme. We believe that the policy of booking entire processing fee as revenues upfront would have contributed almost Rs.6 to ARPU.