IDEA Cellular Company analysis

 

Industry Profile  :  Being one of the fastest growing industry in India and having biggest number of user in all over world makes Indian telecom industry. Mobile Phone industry in India contribute $400 Billion in Indian GDP. Right now India is second largest smartphone market and all thanks to Jio phone, we are ready to make it largest. Before reliance Jio enter into market, there were many companies. But now the consolidation is going on. Reliance communication merge with MTS and promoter is now near to done deal with Aircel. Telenor, New Zealand based company sold business to Airtel. Vodafone Makes deal to merge with idea and Deconsolidation as losses in Indian market makes them vulnerable in home country. All thanks to reliance jio, India become largest data consumer all over the world. The growth is also fueled by Govt initiative to connect all villages via internet with Bharatnet. In second stage of Bharatnet, Private companies also permitted to bid increasing the user base further in rural area.

Company Profile  Idea cellular, a telecom company is part of Aditya Birla group.  The company is a pan-India integrated GSM operator offering 2G, 3G and 4G services and While writing, Third largest Telecom company by market size and after the expected merger with Vodafone, it will be largest company. The company has licenses to operate in all 22 service areas. Presently it is operating in 13 circles. Idea Cellular Provides value–added services like GPRS, call conference, GSM, GPS and also provides customized solutions according to business specific needs, and has its own NLD and ILD operations, and ISP license.  Idea’s pan-India network covers over 400,000 towns and villages across the country.   Idea’s pan-India network comprises of over 240,000 cell sites, nearly half of which is broadband. Idea has also rapidly expanded its fibre network which spread across 1.4 lakh kms at the end of March ’17.

Shareholding Pattern  :  5 promoter entities holding 42.38%. Mutual Funds hold 2.58%. Financial Institutions holding 0.12%. One venture capital Fund holding 0.03%. 5.26% held by Insurance companies. Foreign investors hold 27.23%. Remaining around 2% held by public.

Financials and ratio  :  

 2010 - 112011 - 122012 - 132013 - 142014 - 152015 - 162016 - 17
Revenue15,389.0019,322.3322,086.8726,179.4731,731.8135,999.9935,475.67
Net Profit844.60576.54818.261,689.312,809.842,616.66(831.08)
EPS2.551.742.475.087.947.25(2.31)
Book value37.3339.0942.3046.9560.8467.4865.80
Dividend per share000.300.400.600.600
Dividend payout0012.157.868.078.250
ROE6.844.455.8310.8312.8310.76(3.50)
ROCE4.112.543.074.706.853.90(1.05)
ROA2.951.862.373.844.873.37(0.86)
Asset Turnover53.5562.2164.0359.3554.2344.8736.83

Future Prospectus : Owner of idea, Mr Kumar Mangalam Birla maybe thinking to make one more Ultratech like company with merging his own business and Vodafone. Vodafone on the other hand is irritated with Jio. One of their Best performing market is now headache for them and so The parent DE-CONSOLIDATED its its India business. which was making 33% profit before Jio enters. Now its race towards ZERO. Bharati airtel holding assets like Infratel. So on that front IDEA is lossing market. Low capital expenditure makes them unable service their customrs. Plus Huge debt and also high debt to EBITDA ratio makes them unable to make future plans. IUC cut makes situation worse. Right now in india Data is king for telecom market. In this segment Jio is existing for attractive price and speed. Even though IDEA + Vodafone will make largest company but how can they keep this lead? Capital expenditure makes them handicap. My view is Keep it in watch-list till merger will complete and then think about it.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter