9 August 2016
1QFY17 Results Update | Sector: Telecom
Idea Cellular
Sell
BSE SENSEX
28,085
S&P CNX
8,678
CMP: INR97
TP: INR90(-8%)
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Strategy flip flops hurt growth; outlook remains uncertain
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
IDEA IN
3,600.4
410.1 / 6.0
168 / 97
-8/-21/-41
758
57.8
Financials & Valuation (INR b)
Y/E Mar
2016 2017E 2018E
Net Sales
359.8 385.0 407.9
EBITDA
127.8 130.0 138.0
PAT
29.1
6.8
8.5
EPS (INR)
8.1
1.9
2.4
Gr. (%)
48.1 -78.6 -70.9
BV/Sh (INR)
71.6
74.7
78.3
RoE (%)
13.0
55.5
44.7
RoCE (%)
1.5
1.4
1.3
14.8
28.7
19.2
P/E (x)
1.8
1.7
1.5
P/BV (x)
Estimate change
TP change
Rating change
EBITDA margin down sharply 570bp/150bp on QoQ/YoY:
Idea reported weak
revenue growth (1.4% behind estimates) flat QoQ, up 7.9% YoY to INR
94.9b.This was the 1
st
quarter in the last more than 20 quarters, where Idea’s
revenue growth was behind Bharti revenue growth of 2.7%/9.1% on QoQ/YoY
basis, impacting market share. EBITDA grew by a meager 3.2% YoY, down 15%
QoQ to INR INR30.7b on weak revenue growth couple with high network
operating costs increase of 540bp/180bp on QoQ/ YoY.
Two consecutive quarter of RPM increase hurt voice traffic:
Voice revenues at
INR 67b grew at a sluggish rate of 0.3%/4.7% on QoQ/YoY, led by 1.1% decline
in voice traffic on QoQ to 199.3b. MOU declined 2% QoQ to 379 on the back of
second straight quarter of voice RPM increase of 3.4% to INR 0.343, hurting
traffic growth.
Focus shifts to price led data traffic growth:
Data revenue growth continued to
decelerate to 4.3%/27% QoQ/YoY to INR 19.7b from the peak of 15-20% QoQ
growth until four quarters back. After ARMB improvement of 2.7% in 4QFY16
which dragged down data traffic growth to meager 2%, in the current quarter,
management took a sharp cut in data ARMB of 7.9% to drive volume growth of
13%/49% QoQ/YoY to 93b MBs.
Weak competitive footing, potential spectrum spend of INR 150b may not
pressure:
Idea’s Multiple variations in strategy between price and volume has
led to loss of market share. Additionally, it has pushed Idea on a weak footing
with highest voice RPM and weak traffic growth in Voice business. In data
business, it’s ‘just in time spectrum acquisition’ strategy may not be successful,
as it will be forced to spend about INR 150b toward data led spectrum in the
upcoming auction. Idea may be forced to play the catch up game with the
competition’s data network reach and to support data growth.
Weak competitive footing, heavy capex may put pressure on valuation:
We
expect EBITDA growth of 2%/6% for FY17E/18E led by 180bp margin decline in
FY17E on the back of weak revenue growth and rising network cost on cell site
addition. Our numbers don’t factor any incremental investment in the
upcoming auction. The stock trades at EV/EBITDA of 6x/5.4 on FY17E/18E. We
recommend Sell on the stock with price target of INR 90 based on 5.0x
EV/EBITDA on FY18.
Aliasgar Shakir
(Aliasgar.shakir@MotilalOswal.com); +91 22 3010 2415
Jay Gandhi
(Jay.Gandhi@MotilalOswal.com); +91 22 6129 1546
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Idea Cellular
Idea 1QFY17 Earnings call Highlights
Accounting impact
Financial results cannot be acquired for this quarter due to the impact of full
impact of spectrum acquired in the last two auctions and change in accounting
of carrying cost of unused portion of data package and change in the Ind-AS
accounting.
The restated figures of the last three quarters will be provided in the
subsequent results.
Consolidated results only provides standalone and 100% subsidiary and excludes
all the subsidiaries with minority stake including Indus and Payment bank
subsidiary where Idea holds 49%.
Based on the restated results of Q4FY16, the current quarter’s QoQ revenue
growth is at 1.4%, however, without the change in Q4FY16 financials, it indicates
flat QoQ growth.
Overall Performance and business outlook
Idea’s revenue market share has improved by 110bp to 19.3% in March’16
quarter as per TRAI’s quarterly financial data. Idea’s 140bp market share growth
in the last 1 year highlights that the market share growth strategy is intact.
In the 15 established circles revenue market share is at 22.4%. The 7 new circles
continue to improve competitive standing with 6.8% revenue market share in
March’16. Idea gained 30% of the incremental revenue in the 7 new circles in
March’16.
Idea clocked 28.9% VLR market share in 1QFY17.
Idea garnered 20.5% data industry revenue market share in FY16.
Revenue market share strategy – Idea is currently operating in an extremely
volatile market in line with 2008-09 when the company competed with new
players. Similar to the previous time, Idea will continue to focus on the revenue
market share which is evident from the aggressive network data rollout. Idea is
still getting 30% of incremental subscribers. Idea has become the 2
nd
largest
carrier in terms of data volume. One quarter of missing growth will not impact
the overall strategy to focus of high revenue growth.
High Network cost is attributed to diesel price increase, aggressive network
rollout, high proportion of IT contract allocation toward operating cost. In the
coming quarters, the network cost base should increase from the current level
but will not accelerate at a high pace as majority of the sites will be on loading.
Q2 being seasonally small quarter and impact of heavy rains should put
pressure in Q2FY17 results.
Discussion are on with tower companies for revision of master service
agreements (MSA) which will not have a major positive impact on financials but
Bharti Infratel is giving some sops to realign renewals pricings.
Voice business
Idea clamped down on free and discounted voice minutes during the quarter
improving voice RPM.
st
Voice minutes declined 1.1% on QoQ for the 1 time as Idea experimented with
clamped down on free minutes, which has also led voice RPM improvement
over the last two quarters.
9 August 2016
2

Idea Cellular
Voice tariff increase taken in the last two quarters was to signal the industry
about the need to reduce the overall discount as the industry is moderating.
Idea voice RPM is the highest in the market which is on the way of correction.
High ARPU packs offering voice discount like Bharti’s recent campaign has
limited impact due to its low contribution.
Voice business – Some of the confidence has got shaken in the last two quarters
compared to the steady voice traffic growth in the quarter preceding the last
two quarters. But there is no reason to believe that minutes growths has gone
away. On ground visits by management indicate voice in under penetrated and
will have to see few quarters of weak growth to prove othewise.
Voice RPM strategy is currently different across operators. A lot of 2g network is
getting vacated as subscribers are moving to 3g. Current voice RPM is peaked
and if we don’t see consumers responding to this, we will revisit the voice RPM
levels.
Data business
The telecom sector is metamorphosing from pure voice to data market.
India is in the midst of the largest broadband network rollout which will
transform lives of millions of Indians.
Idea more than doubled its 3g and 4g sites to about 71,170 sites and plans to
surpass 1,00,000 sites by the end of the year.
Sharp increase in smartphone shipments in the industry will drive broadband
growth.
The telecom industry has reduced data pricing by over 20% over the last year to
drive data growth.
Future data market will not be a battle of rates but will be a battle of digital
evolution and promoting data consumption.
Idea’s 28% of subscribers use 2g, 3g or 4g data services.
Data ICR has been terminated in 6 out of the 7 circles during the quarter.
Idea abandoned its previous quarter’s strategy of increasing data pricing and cut
data price by 7.9% during the quarter, leading to 13% data volume growth on
QoQ.
Population of 150mn Indian are covered by Idea’s 4g services in 10 circles,
growing by 27% QoQ.
Data ARPU has been steadily declining owing to data price decline. The positive
side is that lower data ARPU can allow Idea to cater to large scale mass market
subscribers with low ARPUs.
Working on early launch of digital service by Q4FY17 of video and audio content
and chat services. This will be sourced from multiple content owners. The
business model is based on not owning or creating content but to offer wide
array of data service options to subscribers and improve data volume growth.
Data revenue growth – All the telcos are currently in the race to build largest
data infrastructure unlike few years back when data network rollout was done
only as per demand and consumer requirements. Data demand is high across
the country, but not evident in the market, due to large portion of free volume
of data offered in the market. Idea remains extremely positive on the data
volume growth outlook. It is only a matter of time when it will start flowing in
revenues as trial packs consumers will move to paid vouchers.
9 August 2016
3

Idea Cellular
Idea will tap from elite to mass market subscribers to accelerate data subscriber
growth as smartphones become affordable. Subsequently, data ARPU should
see downward trend as we see accelerated subscriber growth in the data
business.
Focus of the company is to expand subscriber base which will require free trial
packs to many existing 3g/4g handset users in the system to increase data
absorption. This could keep data ARMB under pressure.
Management focus is to get mass market consumers to use data. We believe
price for data will settle far quickly. Management remains very optimistic as
field results indicate that many consumers are keen to adopt data consumption
and are in the middle of understand ARPU affordability. In 3-6 quarters, new
customers who are given free trail packs should start adding to revenues.
Volume led growth strategy in data has started pay dividend with nearly double
subscriber addition in Q1FY17 at 5mn. Management targets higher data
subscriber and volume growth.
Data bundled plans are primarily popular in postpaid subscribers but not
prepaid customers who largely consume \low value/ticket size vouchers.
As the data subscriber base move from class to mass market, videos will be the
key content and therefore Idea is gearing to launch its digital platform offering
Idea videos, movies, games, music and also movies at a later date. Idea will try
to attract a lot of non-data subscribers with its digital platform. Management is
also studying and analyzing the quality of content accessed and appreciated by
customers including different language to align content with consumer
requirement.
Tier 2 and 3 markets have the largest potential for data growth and Idea is
getting good response from deep interiors of states like Kerala, Karnataka and
Gujarat as they have limited source of entertainment and therefore data will
witness huge growth as the market grows and new subscribers enroll for data.
Data ICR (intercompany roaming arrangements) revenue is accounted as non-
data VAS revenues and therefore terminating ICR arrangements are not
impacting the data growth.
Network utilization – Idea is adding a mobile broadband site every 10mins with
current capacity utilization of 15-20%, offering healthy volume growth
opportunity.
Management had a change in strategy towards price led approach in voice
business and volume led approach in data but management will remain focused
on subscriber growth.
Industry Outlook
Current 3 dominant players market can accommodate and will increase to 4-5
player market.
Consolidation will get further accelerated in the market driven by high spectrum
costs.
Spectrum Auctions
The upcoming auction will be different from the previous auctions as renewal is
only limited to CDMA players. Spectrum in the upcoming auction is sufficient for
4-5 players to be able to provide broadband offerings.
9 August 2016
4

Idea Cellular
Idea will be selective in spectrum acquisition and adopt just in time strategy due
to ample spectrum in the market and will ensure that it does not invest too
ahead of the time.
Spectrum supply – Idea went through the cycle of tough situation of incurring
heavy investment for spectrum renewals, As two carriers have followed strategy
of putting capital ahead of time to build data network before the requirement.
But Idea will maintain the strategy of investing in spectrum and network only
just in time.
Capex
The top 3 operators invested about INR 300b in capex in the last few years. This
indicates that business leaders are convinced about the opportunity in the data
industry.
Idea has expanded to over 7,650 optic fiber point of presence (PoPs - 3G & 2G in
all Circles, a growth of 6% on QoQ.
The capex guidance remains at INR 65-70bn for FY17.
Exhibit 1: IDEA: SOTP Valuation
Consol EBITDA
Less Net debt
Total Value
Shares o/s (b)
CMP (INR)
Upside (%)
Methodology
FY18 EV/EBITDA
Driver
138
Multiple
5
Fair Value (INRb)
704
381
323
3.6
Value/sh (INR)
196
106
90
97
-7.6
Source: Company, MOSL
9 August 2016
5

Idea Cellular
Story in charts
Exhibit 2: Idea: Subscriber and gross rev market share (%)
Subscriber market share (%)
Gross revenue market share (%)
Exhibit 3: Idea: ARPU and RPM trajectory
Monthly ARPU
Mobile RPM (p)
Voice RPM (p)
46 46 45 44 45 44 46 48
42 42 41 42 44 45 45 44 45
38 37 37 36 36
36 35 35 35 37 38
34 33 32 32 33 34
Source: Company, MOSL
Source: Company, MOSL
Exhibit 4: Voice traffic and QoQ growth
Voice traffic (b minutes)
8.5
5.3
5.2
2.8
4.1
8.6
5.2
5.1
-1.7
QoQ growth
8.4
Exhibit 5: Monthly churn (%)
9.910.1
5.8
5.1
1.2
-1.1
6.9
4.3
Monthly churn (%)
5.0 5.3 5.7
4.2 4.6
5.0
4.2 4.6 4.6
5.1 5.3 4.7 5.2
-5.8
131 126 132 143 147 139 145 157 165 162 171 185 196 189 199 202 199
-4.0
-3.2
Source: Company, MOSL
Source: Company, MOSL
Exhibit 6: Data revenue (% of total)
Data revenue (% of total)
15.6%
11.5%
9.4%
14.0%
7.2%
5.6%
4.3%
10.1%
8.7%
5.3% 6.5%
20.4% 21.1%
Exhibit 7: 3G subscriber base ramp-up
3G subscribers (m)
3G subs (% of total)
14.3%
13.1%
12.3%
11.8%
10.3%
17.8%
19.8% 20.2%
16.9%
3.4%
4.4
4.6% 5.3%
5.9
7.2
6.3%
22.9 25.2
19.6 21.2
14.5 16.7
10.5 12.9
8.8
7.3%
8.6% 9.2%
Source: Company, MOSL
Source: Company, MOSL
9 August 2016
6

Idea Cellular
Story in charts
Exhibit 8: Data traffic and QoQ growth
Data traffic (b MB)
26.5%
31.0%
21.3%
32.8
18.3%
14.9%
13.2%
28.5
QoQ growth
34.4
31.0
Exhibit 9: Data revenue per MB (p)
Data revenue per MB (p)
29.6
26.3
26.9
21.9%
0.0%
13.8%
20.8% 19.4%
19.1% 16.9%
14.8%
15.0%
31.2
31.0
24.6
22.3
22.9
25.3
26.5
25.7
21.1
12.5%
1.5%
23.4
Source: Company, MOSL
Source: Company, MOSL
Exhibit 10: Reported consolidated EBITDA margin (%)
Reported consolidated EBITDA margin (%)
Exhibit 11: EBITDA per minute (p)
EBITDA per minute (p)
13.5
13.7
14.5
15.6
14.5
15.0
14.7
17.1
10.7
10.4
10.9
10.9
13.5
13.2
14.7
15.9
15.2
Source: Company, MOSL
Source: Company, MOSL
Exhibit 12: Net debt and net debt/EBITDA
Net debt (INR b)
2.2 2.1 2.2
2.3
1.4 1.3 1.2
1.5 1.3
1.1 1.1
1.6
Net debt/EBITDA (x)
3.1
1.9
1.9
2.7
Exhibit 13: 2G cell site additions
2G cell site additions
0.0
Source: Company, MOSL
Source: Company, MOSL
9 August 2016
7

Idea Cellular
Exhibit 14: Consolidated P&L and revenue drivers
Consolidated P&L (INR m)
Revenue
EBITDA
EBITDA margin (%)
Depreciation and amortization
EBIT
EBIT margin (%)
Net Finance Costs
Profit before Tax
Share of Associates
Adj Tax
Tax rate (%)
Profit after Tax
Revenue drivers
Total minutes (b)
Revenue per min (paise)
Voice RPM (paise)
Data traffic (b MB)
Data realization (paise per MB)
Data as % of revenue (%)
1QFY16
87,915
29,793
33.9
14,117
15,676
17.8
3,240
12,437
927
4,816
36.0
8,548
1QFY16
196
44.2
32.7
4QFY16
94,839
36,160
38.1
19,737
16,423
17.3
7,678
8,745
2,989
34.2
5,756
4QFY16
202
46.4
33.2
1QFY17
94,866
30,742
32.4
19,192
11,551
12.2
9,224
2,327
1,035
1,158
34.4
2,204
1QFY17
199
47.7
33.6
YoY%
7.9
3.2
-148bps
35.9
-26.3
-566bps
184.7
-81.3
-76.0
-160bps
-74.2
YoY%
1.8
7.8
2.7
48.6
-14.2
325bps
QoQ%
0.0
-15.0
-572bps
-2.8
-29.7
-514bps
20.1
-73.4
-61.3
26bps
-61.7
QoQ%
-1.1
2.8
1.2
13.2
-7.9
84bps
1QFY17E
96,190
34,793
36
21,678
13,115
13.6
8,569
4,546
1,583
35
2,964
1QFY17E
203
47
33.5
v/s est (%)
-1.4
-11.6
-377bps
-11.5
-11.9
-146bps
7.6
-48.8
-26.8
-37bps
-25.6
v/s est (%)
-1.9
2.4
0.2
6.6
-5.0
54bps
62.7
24.6
17.8
82.2
22.9
20.2
93.1
21.1
21.1
87.4
22.2
20.5
Source: Company, MOSL
Exhibit 15: Segmental break-up
1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17
Consolidated revenue break-up (INR b)
Established service areas*
New service areas*
Idea standalone
Proportionate revenue - Indus
Eliminations
Consolidated revenue
Consolidated EBITDA break-up (INR b)
Established service areas*
New service areas*
Idea standalone
Proportionate EBITDA - Indus
Consolidated EBITDA
EBITDA margin (%)
Established service areas*
New service areas*
Idea standalone
Implied margin - Indus
Consolidated EBITDA margin
62.0
3.4
65.4
5.6
-5.6
65.4
19.8
-1.3
18.4
2.3
20.8
31.9
-38.8
28.2
41.4
31.8
59.9
3.3
63.2
5.6
-5.5
63.2
18.7
-1.3
17.4
2.3
19.7
31.2
-38.0
27.6
40.9
31.2
62.8
3.3
66.1
5.6
-5.6
66.1
19.7
-1.6
18.1
2.4
20.6
31.4
-47.5
27.4
42.9
31.1
66.7
3.7
70.4
5.7
-5.7
70.4
21.6
-1.7
19.9
2.4
22.3
32.3
-45.2
28.2
42.2
31.7
71.5
4.0
75.6
5.9
-5.8
75.6
24.4
-1.7
22.7
2.4
25.1
34.1
-42.7
30.0
41.7
33.2
71.4
4.2
75.7
6.0
-6.0
75.7
24.2
-1.8
22.4
2.5
24.9
33.9
-42.4
29.6
42.0
32.9
75.5
4.6
80.1
6.1
-6.1
80.2
26.7
-1.9
24.9
2.7
27.5
35.4
-40.8
31.0
43.7
34.3
79.0
5.2
84.2
6.2
-6.1
84.2
29.6
-1.7
27.8
2.8
30.6
37.4
-33.8
33.1
45.5
36.4
82.5
5.4
88.0
6.2
-6.2
88.0
31.3
-1.7
29.6
2.7
32.3
37.9
-31.1
33.7
42.9
36.7
81.0
5.8
86.8
6.4
-6.3
86.9
29.5
-1.8
27.8
2.8
30.6
36.5
-30.8
32.0
43.8
35.2
84.1
6.0
90.1
6.5
-6.4
90.1
30.3
-1.8
28.5
2.8
31.3
36.0
-29.6
31.6
43.0
34.7
88.1
6.7
94.8
6.7
-6.6
94.8
34.4
-1.2
33.2
3.0
36.2
39.0
-17.5
35.0
44.4
38.1
88.1
6.8
94.9
0.0
0.0
94.9
31.9
-1.1
30.7
2.9
33.6
36.2
-16.7
32.4
35.4
* Mumbai and Bihar included in established service areas from 1QFY14
Source: Company, MOSL
9 August 2016
8

Idea Cellular
Exhibit 16: Summary of estimate change
FY17E
Revenue (INRb)
Old
Actual/New
Change (%)
EBITDA (INRb)
Old
Actual/New
Change (%)
EBITDA margin (%)
Old
Actual/New
Change (bp)
Depreciation & amortization (INRb)
Old
Actual/New
Change (%)
Net finance cost (INRb)
Old
Actual/New
Change (%)
Tax rate (%)
Old
Actual/New
Change (bp)
Net Profit (INRb)
Old
Actual/New
Change (%)
EPS (INR)
Old
Actual/New
Change (%)
386
385
-0.2
135
130
-3.6
35.0
33.8
-121bps
87
81
-6.9
34
37
6.9
35
34.4
-37bps
9.1
11.1
22.1
2.5
3.1
22.1
FY18E
412
408
-0.9
144
138
-4.2
35.0
33.8
-117bps
94
88
-6.4
31
35
11.6
35
34.4
-37bps
12.4
13.1
5.4
3.5
3.6
5.4
Source: Company, MOSL
9 August 2016
9

Idea Cellular
Exhibit 17: Key assumptions
Subscribers (m)
YoY%
Average subscribers (m)
YoY%
Data subscribers (m)
YoY%
Average Rev Per User (INR/month)
YoY%
Minutes of Use/Sub/Month
YoY%
Data usage/data sub/month (mb)
YoY%
Voice traffic (m min)
YoY%
Data traffic (m MB)
YoY%
Voice revenue per min (p)
YoY%
Data revenue per MB (p)
YoY%
Voice revenue (INR m)
YoY%
Data revenue (INR m)
YoY%
Data revenue as % of total revenue
Non Data VAS revenue (INR m)
Capex (INRm)
Capex / Sales (%)
FY13
122
117
26
158
378
119
531534
37380
35.4
32.26
188382
12059
5.4
21038
58452
26.4
FY14
136
129
25
169
381
257
588272
79382
37.2
29.11
218808
23105
8.9
19082
47854
18.3
FY15
158
147
33
177
388
490
684216
172531
35.6
26.32
243676
45404
14.6
22232
38448
12.4
FY16
175
166
44
177
394
641
787075
297920
32.4
23.22
255135
69163
19.6
29148
402629
113.9
FY17E
185
180
64
175
369
695
797488
451116
33.2
19.42
264942
87601
23.1
25901
70000
18.5
FY18E
196
191
87
175
359
798
821326
724490
32.0
15.82
263067
114625
28.6
23293
70000
17.5
Source: Company, MOSL
9 August 2016
10

Idea Cellular
Financials and Valuation
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
PBT bef. EO Exp.
PBT after EO Exp.
Total Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY12
195,412
26.0
144,488
73.9
50,923
26.1
29,813
21,110
10,557
10,553
10,553
3,323
31.5
7,230
7,230
-19.6
3.7
FY13
224,577
14.9
164,531
73.3
60,045
26.7
34,778
25,268
9,495
15,773
15,773
5,664
35.9
10,109
10,109
39.8
4.5
FY14
265,189
18.1
181,852
68.6
83,337
31.4
45,194
38,143
7,700
30,443
30,443
10,765
35.4
19,678
19,678
94.7
7.4
FY15
315,709
19.1
207,592
65.8
108,117
34.2
53,036
55,081
5,755
49,325
49,325
17,396
35.3
31,929
31,929
62.3
10.1
FY16
359,772
14.0
231,932
64.5
127,840
35.5
65,466
62,374
16,993
45,382
45,382
16,239
35.8
29,143
29,143
-8.7
8.1
FY17E
384,952
7.0
254,919
66.2
130,033
33.8
80,736
49,297
36,628
12,669
12,669
5,833
46.0
6,836
6,836
-76.5
1.8
FY18E
407,855
5.9
269,819
66.2
138,035
33.8
87,876
50,160
34,777
15,382
15,382
6,888
44.8
8,494
8,494
24.2
2.1
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
FY12
33,088
97,414
130,502
133,372
6,273
270,147
410,917
141,040
269,877
61
6,799
976
48,639
926
8,227
1,521
37,966
56,205
54,212
1,993
-7,565
270,147
FY13
33,143
111,073
144,217
140,438
11,180
295,834
467,357
175,818
291,539
61
8,811
10,280
53,092
726
9,601
1,429
41,336
67,949
64,719
3,230
-14,857
295,834
FY14
33,196
132,073
165,269
206,350
18,133
389,752
516,970
221,012
295,958
61
114,194
2,155
53,206
683
8,006
1,881
42,636
75,823
68,960
6,863
-22,617
389,751
FY15
35,978
194,314
230,292
268,591
19,015
517,898
618,207
262,871
355,336
61
51,405
115,267
82,598
710
9,789
15,537
56,562
86,769
78,013
8,756
-4,171
517,898
FY16
36,005
221,670
257,675
415,031
30,714
703,420
1,011,254
328,336
682,918
61
60,986
13,728
68,807
1,065
11,776
7,818
48,148
123,081
112,331
10,750
-54,274
703,419
FY17E
36,005
232,773
268,778
429,694
30,714
729,186
1,081,254
409,072
672,182
61
60,986
13,728
101,248
1,042
11,400
35,162
53,645
119,019
108,896
10,123
-17,771
729,186
(INR Million)
FY18E
36,005
245,885
281,890
403,231
30,714
715,836
1,151,254
496,948
654,306
61
60,986
13,728
113,093
1,079
13,156
40,090
58,769
126,339
114,346
11,993
-13,246
715,836
9 August 2016
11

Idea Cellular
Financials and Valuation
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/Equity
FY12
2.0
10.3
36.2
0.0
0.0
FY13
2.8
12.5
40.1
0.3
11.5
FY14
5.5
18.0
45.9
0.4
7.9
FY15
8.9
23.6
64.0
0.6
8.1
11.9
4.5
1.6
2.0
5.9
0.6
16.1
8.2
11.7
0.5
0.6
1
11
1.0
9.6
0.6
FY16
8.1
26.3
71.6
0.6
8.9
13.0
4.0
1.5
2.2
6.2
0.5
11.9
6.8
8.4
0.4
0.5
1
12
0.6
3.7
1.5
FY17E
1.9
24.3
74.7
0.1
6.4
55.5
4.3
1.4
2.0
6.0
0.1
2.6
3.9
4.3
0.4
0.5
1
11
0.9
1.3
1.4
FY18E
2.4
26.8
78.3
0.1
6.8
44.7
3.9
1.3
1.8
5.4
0.1
3.1
4.0
4.5
0.4
0.6
1
12
0.9
1.4
1.2
0.0
5.7
5.7
6.3
0.5
0.7
2
15
0.9
2.0
1.0
0.3
7.4
5.9
6.0
0.5
0.8
1
16
0.8
2.7
0.9
0.3
12.7
7.5
9.0
0.5
0.7
1
11
0.7
5.0
1.2
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY12
7,230
29,813
10,056
-4,141
-8,465
34,493
3,691
38,184
-47,268
-9,083
417
0
-46,851
237
7,349
-11,200
0
-3,614
-12,281
13,801
1,521
FY13
10,109
34,778
9,963
-4,110
6,096
56,836
6,135
62,971
-34,766
28,205
0
657
-34,109
248
-10,368
-9,283
-250
-19,653
9,209
1,521
1,429
FY14
19,678
45,194
8,564
-6,384
5,354
72,406
9,786
82,192
-36,448
45,744
0
-29,194
-65,642
263
-15,936
-7,682
-1,306
-24,661
-8,111
10,729
1,881
FY15
31,929
53,036
9,337
-11,043
5,540
88,800
15,379
104,179
-41,576
62,603
0
-15,680
-57,256
37,374
52,355
-6,656
-2,792
80,280
127,202
3,543
15,537
FY16
29,143
65,466
16,993
0
42,384
153,985
11,699
165,684
-402,629
-236,944
101,539
0
-301,090
-1,760
146,440
-16,993
0
127,687
-7,718
15,537
7,818
FY17E
11,103
80,736
36,628
0
-9,159
119,307
0
119,307
-70,000
49,307
0
0
-70,000
0
14,663
-36,628
0
-21,965
27,343
7,819
35,162
(INR Million)
FY18E
13,112
87,876
34,777
0
403
136,168
0
136,168
-70,000
66,168
0
0
-70,000
0
-26,463
-34,777
0
-61,240
4,928
35,162
40,090
9 August 2016
12

Idea Cellular
Corporate profile
Company description
Exhibit 1: Sensex rebased
Idea Cellular, an Aditya Birla Group company, is
India’s third largest wireless operator with a revenue
market share of ~17%. Idea operates in all the 22
telecom circles of which 15 are classified as
established service areas and 7 as new service areas.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Jun-16
42.2
6.5
25.7
25.6
Mar-16
42.2
5.2
24.2
28.4
Jun-15
42.3
4.7
24.4
28.6
Exhibit 3: Top holders
Holder Name
Axiata Investments 1 (India) Limited
Axiata Investments 2 (India) Limited
P5 Asia Investments (Mauritius) Limited
National Westminster Bank PLC as
Depository of First State Asia Pacific Leaders
Fund A Sub Fund of F
ICICI Prudential Life Insurance Company Ltd.
% Holding
12.9
6.9
3.3
3.2
2.3
Source: Capitaline
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Kumar Mangalam Birla
HIMANSHU KAPANIA
Pankaj Kapdeo
Designation
Chairman
Managing Director
Company Secretary
Exhibit 5: Directors
Name
Arun Thiagarajan
Madhabi Puri Buch
P Murari
Rajashree Birla
Shridhir
Sariputta
Wijayasuriya
Name
Gian Prakash Gupta
Mohan Gyani
R C Bhargava
Sanjeev Aga
Hansa
Tarjani Vakil
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells LLP
Sanjay Gupta & Associates
Umesh Ved & Associates
Type
Statutory
Cost Auditor
Secretarial Audit
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
1.9
2.4
Consensus
forecast
4.9
5.8
Variation (%)
-61.1
-58.6
Source: Bloomberg
Source: Capitaline
9 August 2016
13

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Idea Cellular
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