Idea Cellular has missed Street estimates with a weak performance for the April-June quarter. The company on Monday said its standalone profit slumped 36.1 percent to Rs 497.1 crore from Rs 777.8 crore in the year ago period. During the first quarter, its EBIDTA rose 3.2 percent to Rs 3,074.2 crore from Rs 2,979.3 crore in the first quarter of FY16. Revenues for the quarter stood at Rs 9,486 crore.The company said higher network and operating expenses resulted and multiple inflationary pressures also resulted in increased operating costs. Total debt stood at Rs 37,660 crore as on June 30, 2016, Idea said on Tuesday.
Independent market expert Ambareesh Baliga expects the picture for telecom companies will get worse going ahead, especially when Reliance Jio starts commercial operations. With Reliance Jio’s launch at low prices, volumes and margins for best of players will get affected and the next 3-4 quarters could be worse than what has been seen so far, he said.
Prakash Diwan of prakashdiwan.com said that while revenues surged 9 percent, costs have gone up phenomenally. Idea seems to have spent a lot on network expenses and IT outsourcing and depreciation amortisation because of the capex that has been incurred. These factors have hurt Idea’s top line.
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