Idea Cellular Q2 profit may fall 9.4% to Rs 660 cr: Poll

Telecom operator Idea Cellular is expected to report a 9.4 percent decline (Q-o-Q) in second quarter profit at Rs 660 crore today as July-September quarter is a seasonally weak quarter for the sector, according to the average of estimates of analysts polled by CNBC-TV18. Profit in the previous quarter was Rs 728.2 crore.

Revenue may fall 1.9 percent to Rs 7,417 crore in the quarter ended September 2014 compared to Rs 7,561 crore in previous quarter.

Operating profit is likely to decline 3.9 percent sequentially to Rs 2,413 crore and margin may slip 67 basis points to 32.53 percent in the quarter gone by (but may rise 130 basis points on year-on-year basis).

Key Performance Indicators

Revenue per minute is seen rising 2 percent to 46 paise from 45.1 paise on sequential basis. In Q1 FY15, it was at 45.1 paise, the highest in 4 years.

However, volume may fall 4 percent to 158.6 from 165.23 billion minutes. Minutes of usage is likely to decline 6 percent to 377 from 401 and average revenue per user may slip to Rs 173 from 181, quarter-on-quarter.

Expectations

Second quarter is a seasonally weak quarter. Hence, even in Q2FY14, it had a volume degrowth of 5.8 percent. Idea has a huge rural exposure.

Add to that, Idea had an exceptional Q1 performance with a revenue growth of 7.3 percent, margin at 33.2 percent (at a 6-year high) and a volume growth at 5.2 percent.

According to the poll, data growth is expected to be robust for telecom companies and that may mask seasonality to some extent. Data growth saw a 23 percent increase in revenue and 19 percent in volume and an also increase in data revenue per minute.

Key things to watch out for are upcoming spectrum auctions, data pricing, 4G strategy and trajectory of voice pricing.