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Idea profit down as voice traffic declines, spectrum costs rise

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Idea Cellular reported a decline in its total voice traffic for the April-June quarter and warned that telecom industry growth was slowing.

However, the company reported strong data volume growth due to its aggressive promotions and tariff cuts.

Total voice minutes on Idea’s network fell 1.1% from 201.6 billion in January-March period to 199.3 billion in the April-June. Active subscribers, including those who are roaming, also fell in the quarter to 183.2 mln from 183.9 mln three months earlier.

On the other hand, Idea reported strong quarterly mobile data growth of 13.2% to 93.1 billion MB for the three months.

It also added its highest ever 5 million user addition to its data network. In contrast, Bharti Airtel added only 0.7 mln data users in the quarter.

Total data users on Idea’s network 49 million.

However, Idea’s financial results for the quarter were hit by heavy depreciation and amortization charges.

While the company had reported a D&A charge of Rs 1,411 cr for the same quarter last year, this year, the amount rose to Rs 1,919 cr.

The increase in ‘Depreciation and Amortization charge’ and ‘Interest and Finance cost reflects additional charges on account of renewal of 9 existing expired license & linked spectrum & acquisition of new spectrum, launch of 4G services in 10 circles, introduction of 3G second carrier on 900 MHz in Maharashtra & MP, and the launch of 3G services in Kolkata metro during FY16, the company said.

“Therefore, inspite EBITDA growth, Idea standalone ‘Profit after tax’ for Q1 FY17 stands at Rs 1,348 million (excl. Indus dividend of Rs. 3,623 million) against Rs. 7,778 million in Q1 FY16,” Idea said.

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