On cash availability, Himanshu Kapania, MD of Idea Cellular says the company is well-placed to renew existing spectrums in 900 MHz band. In its Q3 results, the company reported cash profit of around Rs 2,000 plus crore. Next year it expects to generate Rs 10,000 crore cash profit.
Idea will bid for spectrum in the upcoming auction, but with the same prudence it has done in the past, Himanshu Kapania, MD of Idea Cellular told CNBC-TV18. The company spent Rs 18,000 in the last three auctions.
On cash availability, Kapania says Idea is well-placed to renew existing spectrums in 900 MHz band. In its third quarter results, the company reported cash profit of around Rs 2,000 plus crore. Next year it expects to generate Rs 10,000 crore cash profit.
Idea has a huge retention bidding coming up in the 900 MHz band in around nine major circles.
The company has reduced its debt by Rs 8,000 crore since April 2014 and its net debt/EBITDA stands at 1.12x, one of the lowest in the industry, he adds.
Declining to get into a debate on whether this year's auctions will be aggressive or not, he says the current debt of the industry stands at Rs 2.7 lakh crore.
Kapania believes the cost structure of the industry is undergoing a change and consolidation is inevitable due to high cost of entry.
After the company came out with its Q3 numbers, JP Morgan noted that Idea's EBITDA margin beat was driven primarily by lower-than-estimated network operating costs. "Very strong data consumption growth continues and solely drives blended ARPU growth. However, data pricing needs watching in CY15/16," it added.
JP Morgan believes Idea has the most at stake in the upcoming spectrum auction (900 MHz).
In its base case, Morgan Stanley assumes that operators will fill gaps in their existing 3G portfolios by acquiring spectrum in the 2100MHz band. According to the brokerage house, Idea valuation will be impacted by -2.3 percent, Bharti Airtel by -0.2 percent. It forecasts 2100MHz spectrum cost rising to Rs 7970 crore for Idea (from Rs 7330 crore) and to Rs 6210 crore for Bharti (from Rs 5710 crore).
For Idea, MS continues to assume that it will not purchase additional 3G spectrum in the Delhi circle, where they plan to launch 3G services on the 900MH band.
Idea Cellular stock price
On January 29, 2015, at 14:10 hrs Idea Cellular was quoting at Rs 160.20, down Rs 5.8, or 3.49 percent. The 52-week high of the share was Rs 177.30 and the 52-week low was Rs 125.10.
The company's trailing 12-month (TTM) EPS was at Rs 6.89 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 23.25. The latest book value of the company is Rs 44.09 per share. At current value, the price-to-book value of the company is 3.63.
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