Idea Cellular in good knack in Apr-Jun 2011 quarter, 3G key to continue stronger growth

You may be wondering, what impetus made idea launch such a bold ad of its 3G services. The ad, which makes a blunt statement on India’s huge population, with “first TV then Biwi” jingle, takes force from idea’s’ great showing of late, compared to its rivals.



Idea has seen a strong growth in the 13 established telecom circles in recent times and this continues to boost overall performance of Idea Cellular in the June 2011 quarter.

Notably, Idea managed to sell minutes on its network at a slightly higher rate after a long period of stagnation in per-minute rates.

Idea, India’s fourth largest telecom operator by revenue has been reporting a gradual revival in its established 13 circles. Since the September 2010 quarter, revenue from these regions has increased by nearly 22%. And the good thing is, the growth is accompanied by higher profitability notwithstanding the pressure on tariff rates. Its operating margin has expanded by 260 basis points to 29.6% despite a 3% fall in per minute revenue during the period.

However, the strong momentum in the relatively older circles is partially undone by its operations in the nine new circles, including Mumbai, Bihar, and TN among others. Though revenue in these circles has increased by a strong 42% in the past 12 months, the growth was not enough to cover operating expenses. The new operations are yet to break even. The operating loss from these operations widened to 139.7 crore during the June 2011 quarter from 117.3 crore in the previous quarter, has made many experts worried. But experts are positive about the company, as it is gaining a strong foothold in the domestic telecom market. Notably, Idea has the distinction of having one of the highest proportions of active subscribers among peers. According to the latest TRAI data of May 2011, 90 percent of Idea subscribers had an active account. --------

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