Idea Cellular, India's third-biggest mobile phone carrier by revenue, said a squeeze on margins held back a rise in profit below expectations and forecast sector growth would be muted in the first half of the year.
Idea, part of the Aditya Birla conglomerate, said consolidated net profit rose 32 per cent to Rs 234 crore for its fiscal first quarter ended June, its first profit rise in five quarters.
“Overcapacity in the sector continues, hyper-competition remains,” Managing Director Himanshu Kapania told reporters at a news conference.
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India's telecom market, the world's second-biggest after China, has been hit by regulatory uncertainty after a massive scandal over the below-market price sale of lucrative telecoms permits in 2008 came to light.
Eight carriers including Idea Cellular are set to lose some or all of their permits after theSupreme Court revoked all licences awarded in the scandal-tainted process.
Idea must win back seven lost licences in an auction to retain its national footprint and compete with bigger rivals Bharti Airtel and Vodafone's local unit.
"Fundamentally we are a pan-India operator and we intend to be a pan-India operator," Chief Financial Officer Akshaya Moondra told reporters, adding the company will bid in the auction.
While carriers have protested a high auction starting price proposal from the sector regulator, the government is also considering levying a one-time fee on existing airwave holdings that would further increase the payout for companies.
Ahead of the earnings, shares in Idea closed 1.8 per cent down at Rs 80.20 in a Mumbai market that fell 1.6 per cent.
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Idea, which is also one-fifth owned by Malaysia's Axiata, said revenue grew about 22 per cent from a year earlier to 55.04 billion rupees.
Analysts on average had expected the company to report a net profit of Rs 301 crore rupees on revenue of 56.04 billion rupees, according to Thomson Reuters I/B/E/S.
Idea's monthly average revenue per user (ARPU), a key metric for telecoms, fell to Rs 156 from Rs 160 rupees in the previous quarter, while average realisation per minute (ARPM) dropped to 0.412 rupees from 0.422 rupees in the previous quarter.
Idea, which launched third-generation (3G) mobile services in the June quarter last year after buying costly airwaves in an auction, said it had 3.1 million active 3G customers out of a total customer base of 117.2 million as of June.
Copyright @ Thomson Reuters 2012
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