Stock Market Flash on Idea Cellular for 4QFY2011.

Idea Cellular (Idea) reported its 4QFY2011 results which outperformed street as well as our expectations on all fronts. The revenues came in at `4,235cr (vs. our expectation of `4,136cr), up 7.1% qoq. This was on the back of higher subscriber growth of 9.4% qoq to 89.5mn which overshadowed the negative impact of decline in MOU and ARPM to 397mn (1.0% qoq decline) and 0.41`/min (2.9% qoq decline) from 401min and 0.42`/min in 3QFY2011, respectively. Surprisingly, VAS share in mobility revenues, which grew qoq for all other telecom companies, declined for Idea to 12.1% from 13.0% in 3QFY2011.

4QFY2011: Key performance indicators

	4QFY11	4QFY11E	% Var	3QFY11	% chg (qoq)	4QFY10	% chg (yoy)
ARPM (`/min)	0.41	0.42	(2.8)	0.42	(2.9)	0.47	(13.6)
MOU (min)	397	394	0.8	401	(1.0)	398.0	(0.3)
ARPU (`/month)	161	164	(1.7)	168	(4.2)	185.0	(13.0)
Subscriber base (mn)	89.5	85.8	4.3	81.8	9.4	63.8	40.3

The EBITDA margin grew by 142bp qoq to 25.4% (vs. our expectation of 25.4%), aided by almost flat (qoq) network operating expenses and employee costs. PAT stood at `274.5cr, up 13% qoq, aided by less than expected interest cost as the interest related to payment for 3G spectrum fees of `124cr has been capitalised during this quarter against our expectations of it getting amortized post the launch of 3G services. Net debt of for Idea currently stands at 10,545cr.

4QFY2011: Result highlights

(` cr)	4QFY11	4QFY11E	% Var	3QFY11	% chg (qoq)	4QFY10	% chg (yoy)
Net sales	4,235	4,136	2.4	3,956	7.1	3,348	26.5
EBITDA	1,075	1,049	2.5	948	13.4	924	16.4
EBITDA margin (%)	25.4	25.4	2bp	24.0	142bp	27.6	(220)bp
Reported PAT	275	174	58.1	243	13.0	267	3.0

Overall, the results were good with revenue growth ahead of its peers supported by strong net subscriber additions. The company has given capex guidance of `4,000cr for FY2012, which is higher than our expectations. The stock is currently under review and we will be releasing a detailed result update post the concall.