Background
- Idea Cellular Limited (ICL) was incorporated as Birla Communications Ltd. in the year 1995.The name of the company was changed to Birla AT&T Communications Ltd. and then subsequently to Birla Tata AT&T Ltd. in the year 2001and finally in the year 2002 name was changed to present.
- ICL is the fifth largest GSM mobile services operator, has licenses to operate in 11 circles. It has more than 13 mn subscribers and is adding almost 800,000 more a month.
- ICL has made a pre-ipo placement of Rs 375 crore to its promoters, at the top end of the price band.
- The Birla group has 65.8% equity stake in Idea. Birla has invested Rs13.73 bn in IDEA in this financial year.
- The company also proposes a green shoe option not exceeding Rs3.19bn in excess of the equity shares that are included in the IPO.
- Idea Cellular was awarded a National Long Distance (NLD) licence by the Department of Telecommunications. It will set up the NLD network by March 2008.
- Building, strengthening and expanding its network and related services in the new circles.
- Entry fee and capital expenditure for NLD operations.
- Rollout of services in Mumbai circle.
- Redemption of preference shares.
- Cellular subscribers are growing at a y-o-y CAGR of 94% in last 10 years, adding nearly six mn subscribers a month. Mobile subscribers are estimated to increase to approximately 210 mn by FY 2008.
- Three drivers like falling handset costs, lowest tariff as compared to other parts of the world and extensive reach have reduced the entry barriers for new subscribers and thus expanded the market available to telecom service providers .
- Its subscriber base increased from 10.36 mn to 12.4 mn during the last quarter, while revenues rose by 49.9% to Rs11.48 bn.
- ICL has 8% market share in the country where less than one in seven people own a cell phone.
- In a span of last five years, the total subscriber base has increased at a CAGR of 86%.
- ICL subscriber numbers have increased by approximately 68.8% in the last nine months to 12.44 mn as at December 31, 2006 from 7.37 mn subscribers as at March 31, 2006.
- In the absence of whole India presence like other integrated operators, Idea Cellular is unable to provide seamless roaming services and is forced to share its revenue with other operators.
- Company is dependent on a number of relevant fixed-line, NLD, ILD and other mobile operators for its interconnection arrangements and leased-line arrangements.
- Average monthly churn rate is increasing at 6.2%, 7.3% and 6.2% for financial years 2004, 2005 and 2006 respectively.
- ICL had negative cash flows in the financial years 2002, 2003 and 2006. Any negative cash flows in the future could have an adverse effect on its operations.
- Total revenues increased 31.1% to Rs. 29,733.83 mn for the financial year 2006 from Rs. 22,674.56 mn for the financial year 2005. This increase was mainly due to increase in its subscriber base.
- ARPU declined by 5.5% to Rs. 391 for the financial year 2006 from Rs. 414 for the financial year 2005 per subscriber per month.
- Other income decreased by 32.8% to Rs. 78.97 mn for the financial year 2006 from Rs. 117.43 mn for the financial year 2005. This decrease resulted from reduced interest income.
- Post issue EPS work out to be Rs.0.78 (on upper price band) and Rs. 0.77(on lower price band). Post issue P/E will be in the range from 84 to 96 for the price band of Rs.65/- to Rs.75/-.
- Profit after Tax (PAT) for the fiscal year 2006 was Rs. 2030.43 mn, which increased by 197% in comparison to the last fiscal, which was Rs.682.73 mn.