28 July 2017
1QFY18 Results Update | Sector: Telecom
Idea Cellular
Buy
BSE SENSEX
32,310
S&P CNX
10,015
CMP: INR96
TP: INR110 (+15%)
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Latent synergies to bolster growth
Flat consolidated revenues – a solace to Idea:
Marred by disruption in the
sector over the last two quarters, Idea’s revenue for 1QFY18 came in flat QoQ
(-14% YoY) at INR81.7b. Recovery in voice revenue growth to 2% QoQ (to
INR61b) was offset by data revenue decline of 7% QoQ (to INR13.7b). The risk
of down-trading due to unlimited price plans was offset by traffic recovery led
by end of RJio’s free usage offer. Subsequently, ARPU stabilized to INR141 from
INR142 in the quarter. The key negative in Idea’s result is the continued fall in
data subscribers (10% QoQ), which can be ascribed to broadband subscriber
churn due to their migration to 4G devices.
EBITDA declines 11.5%,
commensurating estimate
QoQ:
Overall revenues
recovered from the lows, but EBITDA continued to decline (-12%QoQ or -39%
YoY to INR18.8b), largely due to higher network expenses (+6%QoQ) and
roaming and access charges. Consequently, margin shrunk 300bp QoQ
(-970bpYoY), and net loss widened QoQ to INR8.1b from INR3.3b.
Silver linings to the cloud:
We believe competitiveness in the industry is likely
to bottom out by end-FY18 and that RJio’s VoLTE offering is not price-
disruptive. VoLTE network launch by incumbents and improving handset
ecosystem may leave only 3-4 telecom players in the market. The CCI approval
for Vodafone-Idea merger will: (1) allow them to plan the network synergies
sooner, 2) reduce the gestation period and 3) create a strong competitive
position in the market.
Maintain Buy with TP of INR 110:
Idea is valued at 9x EV/EBITDA on FY19E,
which partly captures the gains from Vodafone merger. The estimated back-
ended synergy gains (not yet modeled in our numbers) in FY20 value the stock
at 6.8x on FY20E. Gains from tower sale may provide further upside. We
maintain
Buy
with TP of INR110 on 9.5x FY19E EV/EBITDA. However, the
merger, as well as its timelines, remains a key risk to our rating.
FY17
2Q
3Q
93,002 86,627
7.0
-3.9
64,601 64,973
28,401 21,655
30.5
25.0
19,543 19,653
1,057 1,143
8,753 9,232
1,162 -6,087
1,162 -6,087
247 -2,248
21.3
36.9
915 -3,839
-88.7 -150.2
1.0
-4.4
FY18
2QE
3QE
84,531 87,974
-9.1
1.6
64,590 66,687
19,941 21,286
23.6
24.2
21,348 21,889
834
851
11,131 11,131
-11,704 -10,882
-11,704 -10,882
0
0
0.0
0.0
-11,704 -10,882
-1,379.6 183.5
-13.8 -12.4
FY17
355,758
12.7
252,995
102,763
28.9
78,272
4,218
37,342
-8,633
-8,633
-4,636
53.7
-3,997
-117.3
-1.1
FY18E
346,806
-2.5
262,618
84,188
24.3
86,461
3,371
44,932
-43,833
-43,833
-4,497
10.3
-39,336
884.1
-11.3
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
IDEA IN
3,601
344.0 / 5.4
124 / 66
13/7/-24
1692
57.6
Financials & Valuations (INR b)
Y/E Mar
2017 2018E 2019E
Net Sales
355.8 346.8 368.7
EBITDA
102.8
84.2
95.0
Adj PAT
-4.0 -39.3 -40.8
EPS (INR)
-1.1 -10.9 -11.3
Gr. (%)
-116.2 884.1
3.6
BV/Sh (INR)
68.6
57.7
46.4
RoE (%)
-1.6 -17.3 -21.7
RoCE (%)
1.5
-0.3
0.3
P/E (x)
-86.2
-8.8
-8.5
P/BV (x)
EV/EBITDA (x)
Estimate change
TP change
Rating change
1.4
8.1
1.7
10.0
2.1
9.0
Quarterly Performance (INR m)
Y/E March
Gross Revenue
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Share in Profits from Associates
Net Finance Costs
PBT before EO expense
PBT
Tax
Rate (%)
Reported PAT
YoY Change (%)
Margins (%)
1Q
94,866
7.9
63,917
30,949
32.6
19,192
1,035
9,431
3,361
3,361
1,158
34.5
2,203
-74.2
2.3
4Q
81,261
-14.3
60,062
21,199
26.1
19,885
983
9,366
-7,069
-7,069
-3,792
53.6
-3,277
-156.9
-4.0
1Q
81,665
-13.9
62,911
18,754
23.0
20,679
818
11,539
-12,646
-12,646
-4,497
35.6
-8,149
-469.9
-10.0
4QE
92,073
13.3
68,398
23,675
25.7
22,545
868
11,131
-9,133
-9,133
0
0.0
-9,133
178.7
-9.9
1QFY18E Variance %
2.5
79,689
-16.0
60,713
3.6
-1.2
18,977
23.8 -85 bp
-0.9
20,857
1,003
-18.4
9.8
10,513
-11,391
11.0
-14,291
-11.5
49.9
-3,000
26.3 922 bp
-2.9
-8,391
-2.3
-480.9
-10.5 -55 bp
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.
Aliasgar Shakir - Research analyst
(Aliasgar.Shakir@motilaloswal.com); +91 22 3982 5423
Hafeez Patel - Research analyst
Hafeez.Patel@motilaloswal.com); +91 22 3010 2611

Idea Cellular
1QFY18 Earnings call highlights
Business Performance:
The fall in realization for Idea was more than compensated by traffic volume
growth.
ARMB saw unprecedented decline due to the impact of unlimited price plans.
In an environment of steep realization fall, EBITDA declined 11.5% due to higher
operating cost, including roaming and access charges.
Idea reported subscriber VLR of 199m, with 19.5% subscriber market share and
18.9% revenue market share.
Total data subscribers have declined.
Voice revenue grew 2%. Voice traffic growth offset the voice price decline.
Idea sustained market competitiveness and has added subscribers over the last
12 months. Remained the 2nd player in terms of VLR subscriber market share at
19.5%
4.1m data users lost during 1QFY18. However, broadband subscribers increased
1.6m, partly offsetting the 2g data subscriber decline of 5.8m.
Idea Music, Idea Movie Club and Idea Game Spark digital offerings have seen
healthy traction.
Forex gain/loss is regrouped, with interest and finance cost from other expenses
before EBITDA.
Finance and depreciation cost increase is on the back of launch of 3g and 4g
service during the quarter.
Net debt to EBITDA stands at 7.19x.
Industry Landscape
Heavily discounted pricing in the market with unlimited price plan is likely to
drive industry decline. Smaller players with no 4g network may see more
pronounced impact.
The financial stress remains at its peak with the launch of unlimited plans,
resulting in steep decline in profitability and cash flows.
Operators have urged the inter-ministerial Group (IMG) to a) increase the
interconnect charge (IUC) for incoming calls on cost plus basis or help in
reducing the asymmetric incoming voice traffic from the new entrant, b.)
Rationalize the taxes and levies including 18% GST and high license fee c.)
Provide relief towards deferred payment cost of spectrum. Management is
hopeful that some positive development will happen.
The policy of net neutrality may hinder RJio’s VoLTE offerings, which limit data
usage toward only captive digital apps.
The MOU on unlimited price plans in the US is much lower v/s India’s current
unlimited plan. RJio has about 600 MOU, Bharti has 500 MOU and Idea has ~400
MOU on unlimited plans.
The 14 paise IUC was set by the TRAI, based on the assumption that inflow and
outflow traffic ratio will not change. But it has changed post the launch of RJio.
International examples also indicate that it should go up to cover the cost. China
has IUC of INR0.4 plus incoming call charge. Indonesia has INR1.75/min and
Brazil has INR2/min.
28 July 2017
2

Idea Cellular
Idea is requesting TRAI to seek the workings of rate reduction and is hopeful
that it will provide the details to understand the gap between TRAI workings and
Idea’s high IUC.
The data pricing may reduce from 5 paise to 3 paise, but the time spent on
internet is significantly growing and the viral effect seen in voice market before
may spread to data.
Idea Outlook and Strategy
The company is not proactive in dropping voice/data rates, but will follow the
aggression by the no 1 player with the requisite discount and unlimited plans.
The decline of data subscribers witnessed by Idea is predominantly due to the
2g subscribers which are upgrading to 4g handsets and deciding their operator
of choice in circles where Idea does not have broadband coverage. However, the
shift is on dual sim-card phones, and therefore the impact is not seen on overall
VLR subscribers. With the 4g network ramp-up, this trend has started reversing
June onwards.
Idea’s ~20% subscribers are using internet services. As 3g/4g subscriber
penetration improves, it will be offset the revenue impact.
Idea’s data usage is growing at a high pace, garnering highest data
usage/subscriber.
To counter RJio’s new VoLTE offering, Idea is not offering bundled offers. It has
never involved in bundled offering and will maintain that stance to not subsidize
handset.
Idea is working with handset makers to fill the discount gap between RJio and
other handsets.
The past experience based on 2002 CDMA era indicates that subscribers prefer
flexibility of handset in deciding network operator.
The VoLTE phones v/s current smartphone do not have android platform, it has
low memory, and the small screen size doesn’t appeal the subscribers.
Idea is in discussion with handset makers to bridge the gap between RJio VoLTE
feature phones compared to the phones available in the market by reduction of
material cost and reduced features.
Idea will be supporting handset makers in terms of bundle and distribution
reach to force them to reduce price based on lower material cost and reduced
pricing.
Management is trying to optimize cost to support margin and safeguard from
the loss of revenue.
Idea is confident of handling voice and data traffic, which will continue to
increase due to the unlimited price plans.
ARPUs of bundled plan are higher than non-bundled plan, so if the bundled
offering increases, it will improve the ARPU. This will be based of higher volume
growth offsetting the pricing.
Low data pricing, high data coverage, improving data experience and reducing
handset pricing all lead to the possibility of high data subscriber penetration to
30%-50%.
GST will impact the revenue as telecom companies cannot pass it to subscribers.
28 July 2017
3

Idea Cellular
Capex, Network rollout and Leverage
The data network covers 106,000 towns covered with 500m population.
Idea has ramped up its network with about 46,500 4G sites covering 350m
population in 20 circles.
4g network utilization is well below 30%. The company is taking additional steps
of increasing capacity with 2500 and 2300mhz capacity addition. Will focus on
4g data capacity addition with just-in-time approach, instead of deploying far
ahead of the time.
Idea has capacity to support double-digit voice volume growth, but it is also
launching VoLTE network.
Capex in all the 8 leadership markets is ahead of the other operators, only
behind RJio, which is a 4g operator. Idea is ensuring deep 4g network in
leadership circles.
Management has maintained its capex guidance. In the first quarter, capex
incurred has been low, but will compensate the same by Dec’17 and focus on
capacity in 4QFY18. Despite the EBITDA, it will continue capex and add 4g sites.
Idea is in the process of doubling 4g sites and introduce 2300mhz and 2500mhz
spectrum. It will be adding 4g sites to complete population coverage in the
respective circles. Post the deployment of 4g sites and 2300mhz and 2500mhz
spectrum, it will look at upgrading 2100mhz spectrum and 3g sites to 4g.
However, that option may be exercised post the merger.
Idea is geared to invest enough to manage more than 10 times the capacity
compared to its current coverage.
In the 8 leadership circles, the intention is to cover 90% of 3g sites with 4g by
the end of the year. Already 80-90% 2g sites are covered by 3g.
77% of population coverage of 2g sites has either 3g or 4g network and it will
increase.
Large pocket of metros, tier 1 areas are fully covered with 4g, and smaller towns
are ready for coverage. Once coverage is done, based on capacity growth, the
high spectrum deployment will be done just in time instead of far ahead of the
time.
The difference in the quantum of capex between Idea and large operators is
mainly due to the timing as Idea is following just in time capex strategy.
The leverage has increased due to the fall in EBITDA instead of increasing debt.
Management is ensuring that it can adequately fund capex.
Vodafone-Idea Merger
Vodafone-Idea Merger: Received approval from CCI, which is one out of 4 key
approvals required. Scheme of arrangement is filed with the SEBI and stock
exchange and waiting for their approvals.
Approval of CCI on Vodafone-Idea merger will allow both to plan network
integration, since it can’t be planned now. So once the merger is consummated,
the synergy can be brought into effect as soon as possible. Currently, Idea is
seeking consultation on the same.
The IPO of non-Indus Idea tower portfolio remains one of the options to
monetize the assets.
VoLTE
Idea should launch VoLTE network in 6-9 months period by early CY18. It has
completed network planning and is now finalizing the closure of contract with
VoLTE suppliers
.
28 July 2017
4

Idea Cellular
Story in charts
Exhibit 1: Idea: Subscriber and gross rev market share (%)
Subscriber market share (%)
Gross revenue market share (%)
Exhibit 2: Idea: ARPU and RPM trajectory
Monthly ARPU
Mobile RPM (p)
Voice RPM (p)
48 47
44 45 45 44 45 46 46 45 44 45 44 46
41
37 38 38 37 37 36 36 34
33 32 32 33 34 33
29
35 32
26 24
Source: Company, MOSL
Source: Company, MOSL
Exhibit 3: Voice traffic and QoQ growth
Voice traffic (b minutes)
2.8
4.1
8.6
5.2
5.1
8.4
5.8
5.1
QoQ growth
10.3
7.3
1.2
-1.1
-1.9
8.4
Exhibit 4: Monthly churn (%)
Monthly churn (%)
-5.8
-1.7
-3.2
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: Data revenue (% of total)
Data revenue (% of total)
Exhibit 6: 3G subscriber base ramp-up
3G subscribers (m)
3G subs (% of total)
Source: Company, MOSL
Source: Company, MOSL
28 July 2017
5

Idea Cellular
Story in charts
Exhibit 7: Data traffic and QoQ growth
Data traffic (b MB)
QoQ growth
Exhibit 8: Data revenue per MB (p)
Data revenue per MB (p)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 9: Reported consolidated EBITDA margin (%)
34 36 34 35 35
32 31 31 32 33 33
38
33 31
Exhibit 10: EBITDA per minute (p)
EBITDA per minute (p)
25 26 23
Source: Company, MOSL
Source: Company, MOSL
Exhibit 11: Net debt and net debt/EBITDA
Net debt (INR b)
Net debt/EBITDA (x)
Exhibit 12: 2G cell site additions
Source: Company, MOSL
Source: Company, MOSL
28 July 2017
6

Idea Cellular
Exhibit 13:
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
1QFY17
94,866
30,949
32.6
19,192
11,757
12.4
9,431
2,326
1,035
1,158
34.5
2,203
4QFY17
81,261
21,199
26.1
19,885
1,314
1.6
9,366
-8,052
983
-3,792
53.6
-3,277
1QFY18
81,665
18,754
23.0
20,679
-1,925
-2.4
11,539
-13,464
818
-4,497
35.6
-8,149
YoY%
-13.9
-39.4
-966bps
7.7
-116.4
-1475bps
22.4
-678.9
-21.0
-488.3
111bps
-469.9
QoQ%
0.5
-11.5
-312bps
4.0
-246.5
-397bps
23.2
67.2
-16.8
18.6
-1808bps
148.7
1QFY18E
79,689
18,977
23.8
20,857
-1,881
-2.4
10,513
-12,393
1,003
-3,000
26
-8,391
v/s est (%)
2.5
-1.2
-85bps
-0.9
2.4
0bps
9.8
8.6
-18.4
49.9
922bps
-2.9
Source: Company, MOSL
Exhibit 14:
Key Operating Metrics (QoQ)
EOP (mn)
ARPU (INR/sub/month)
Voice metrics
Voice revenues (INRm)
MOU (min/sub/month)
RPM ex VAS (INR/min)
Total Minutes (bn mins)
Voice ARPU
Data metrics
Data Revenues (INRm)
data share
non voice contribution
Data Subs (mn)
as a % of overall subs
3g subs (mn)
as a % of data subs
as a % of overall subs
Data ARPU (INR)
Data ARMB (INR)
Data usage/subs (mb)
Data traffic (mnMBs)
1QFY17
176
181
67,038
379
0.336
199.3
127.2
19650
21.0%
28.2%
49
27.8%
25.20
51.4%
14.3%
141
0.211
674
93127
4QFY17
190
142
59,747
412
0.258
231.4
106.3
14607
18.4%
24.9%
42
22.3%
21.61
51.2%
11.4%
110
0.115
957
127014
1QFY18
189
140
60,912
441
0.243
250.7
107.3
13652
17.1%
23.6%
38
20.2%
19.88
52.2%
10.5%
113
0.054
2204
252822
YoY%
7.3%
-22.4%
-9%
16.4%
-27.5%
25.8%
-15.7%
-30.5%
-3.9%
-4.6%
-22.3%
-7.7%
-21.1%
0.8%
-3.8%
-19.5%
-74.4%
227.0%
171.5%
QoQ%
-0.3%
-1.1%
2.0%
7.0%
-5.7%
8.4%
0.9%
-6.5%
-1.2%
-1.3%
-9.7%
-2.1%
-8.0%
1.0%
-0.9%
3.0%
-53.0%
130.3%
99.1%
1QFY18E
194
135
59,519
420
0.246
241.6
103.5
13127
16.9%
23.4%
43
22.5%
v/s est (%)
-2.4%
3.9%
2.3%
4.9%
-1.3%
3.8%
3.6%
4.0%
1.3%
0.9%
-12.4%
-10.2%
102
0.098
1044
134294
11.0%
-44.8%
111.1%
88.3%
Source: MOSL, Company
28 July 2017
7

Idea Cellular
Exhibit 15: Summary of Estimate change
FY17
Revenue (INRb)
Old
Actual/New
Change (%)
EBITDA (INRb)
Old
Actual/New
Change (%)
EBITDA margin (%)
Old
Actual/New
Change (bp)
356
356
0.0
103
103
0.0
28.9
28.9
0bps
FY18E
339
347
2.3
86
84
-2.1
25.4
24.3
-109bps
FY19E
363
369
1.5
95
95
0.3
26.1
25.8
-30bps
Source: MOSL, Company
Exhibit 16:
Key Operating Metrics (YoY)
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
32.3
188382
12059
5.4
21038
57145
25.8
FY14
136
129
25
169
381
257
588272
79382
37.2
29.1
218808
23105
8.9
19082
44388
17.0
FY15
158
147
33
177
388
490
684216
172531
35.6
26.3
243676
45404
14.6
22232
43222
13.9
FY16
175
166
44
177
394
641
787075
297920
32.4
23.2
255135
69163
19.6
29148
378140
107.0
FY17
190
182
42
159
383
843
837449
436423
30.2
16.4
252601
71654
20.5
24498
177290
50.8
FY18E
197
193
48
145
448
2374
1041008
1285493
24.1
5.1
250648
65955
19.6
19743
0
0.0
FY19E
205
201
63
148
444
3210
1070099
2131529
22.7
4.6
243235
97013
27.1
17478
65000
18.2
Source: MOSL, Company
Exhibit 17: Valuation Summary
Consol EBITDA
Less Net debt
Total Value
Shares o/s (b)
CMP (INR)
Upside (%)
Methodology
FY19 EV/EBITDA
Driver
95
Multiple
9.5
Fair Value (INRb)
907
511
396
3.6
Value/sh (INR)
252
142
110
96
15
Source: MOSL, Company
28 July 2017
8

Idea Cellular
Exhibit 18: Proforma statement for Vodafone-Idea merged entity (INR m)
Announced
Idea
Vodafone
Topline
growth
Idea
Vodafone
EBITDA
margin
growth
Synergy
EBITDA (post synergy) 248,910
margin (post synergy)
33%
Debt
Market cap
EV
EV/EBITDA
Net Debt to EBITDA
945,485
219,083
29%
177,853
24%
FY16
359,494
403,457
762,951
FY17
392,391
355,758
748,149
-2%
102,763
116,320
219,083
29%
-12%
Approval
stage
FY18
346,806
385,842
732,648
-2%
Year 1
FY19
368,718
418,119
786,837
7%
Year 2
FY20
374,981
452,150
827,130
5%
Year 3
FY21
392,650
482,816
875,466
6%
Year 4
FY22
411,287
513,679
Factoring 200-350bp market share
924,966
dilution for Vodafone and Idea over
FY16-21E
6%
Comments
119,676
129,234
248,910
33%
177,853
24%
-19%
202,652
26%
14%
-
202,652
26%
239,868
29%
18%
21,000
260,868
32%
262,640
30%
9%
50,400
313,040
36%
1,079,000 1,079,000 1,079,000 1,079,000 1,079,000
687,033
687,033 687,033 687,033 687,033 687,033
1,632,518 1,766,033 1,766,033 1,766,033 1,766,033 1,766,033
6.6
8.1
9.9
8.7
6.8
5.6
3.8
4.9
6.1
5.3
4.1
3.4
295,989
Building recovery from FY19E
32%
13%
Opex synergy is 60% of INR 140b
67,200 total. Building 0% synergy in FY19 and
80% synergy in 4th year - FY22
363,189
39%
Not factoring reduction in debt due to
1,079,000 potential tower sale in FY19, and FCF
generation.
687,033
1,766,033
4.9
Value accretion only from FY20E
3.0
Source: MOSL, Company
28 July 2017
9

Idea Cellular
Financials and Valuations
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
PBT bef. EO Exp.
Share of profits of associates
PBT after EO Exp.
Total Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY13
224,577
14.9
164,531
73.3
60,045
26.7
34,778
25,268
9,495
15,773
0
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
0
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
0
49,325
17,396
35.3
31,929
31,929
62.3
10.1
FY16
359,494
13.9
239,818
66.7
119,676
33.3
62,561
57,115
18,831
38,284
4,217
42,501
15,220
35.8
27,281
24,574
-14.6
7.6
FY17
355,758
-1.0
252,995
71.1
102,763
28.9
78,272
24,491
37,342
-12,851
4,218
-8,633
-4,636
53.7
-3,997
-3,997
-114.7
-1.1
FY18E
346,806
-2.5
262,618
75.7
84,188
24.3
86,461
-2,272
44,932
-47,205
3,371
-43,833
-4,497
10.3
-39,336
-39,336
884.1
-11.3
FY19E
368,718
6.3
273,754
74.2
94,964
25.8
92,569
2,395
46,800
-44,405
3,649
-40,756
0
0.0
-40,756
-40,756
3.6
-11.1
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
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
-22,616
389,752
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
986,766
303,848
682,918
61
60,986
13,728
68,807
1,065
11,776
7,818
48,148
123,081
112,331
10,750
-54,273
703,420
FY17
36,053
211,269
247,322
550,545
13,218
811,085
1,149,691
382,120
767,571
61
75,351
63,783
59,912
588
13,139
827
45,358
155,592
151,551
4,041
-95,681
811,085
(INR Million)
FY18E
36,053
171,933
207,986
576,641
13,218
797,845
1,214,691
468,580
746,110
61
75,351
63,783
77,513
1,216
14,243
10,997
51,057
164,974
159,520
5,454
-87,461
797,845
FY19E
36,053
131,177
167,230
613,747
13,218
794,195
1,279,691
561,150
718,541
61
75,351
63,783
110,705
702
15,143
39,218
55,642
174,246
169,605
4,641
-63,541
794,195
28 July 2017
10

Idea Cellular
Financials and Valuations
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
FY13
2.8
13.5
43.5
0.3
11.5
FY14
5.5
19.5
49.8
0.4
7.9
17.5
FY15
8.9
23.6
64.0
0.6
8.1
10.8
4.0
1.5
1.9
4.5
0.6
16.1
8.2
11.7
0.5
0.6
1
11
1.0
9.6
0.6
FY16
6.8
24.2
71.6
0.6
9.5
14.0
3.9
1.3
2.1
6.2
0.6
10.1
6.3
7.7
0.4
0.5
1
12
0.6
3.0
1.5
FY17
-1.1
20.6
68.6
0.0
0.0
-86.2
4.6
1.4
2.5
8.1
0.0
-1.6
1.5
1.8
0.3
0.4
1
13
0.4
0.7
2.0
FY18E
-10.9
13.1
57.7
0.0
0.0
-8.8
7.3
1.7
2.6
10.0
0.0
-17.3
-0.3
-0.3
0.3
0.4
1
15
0.5
-0.1
2.4
FY19E
-12.3
13.4
46.4
0.0
0.0
-8.5
6.6
2.1
2.5
9.0
0.0
-21.7
0.3
0.4
0.3
0.5
1
15
0.6
0.1
3.1
0.3
7.4
5.9
6.0
0.5
0.8
1
16
0.8
2.7
0.9
6.6
0.4
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
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
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
0
-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
0
-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
0
80,280
127,202
3,543
15,537
FY16
30,799
66,508
18,498
-10,789
-3,429
101,587
16,560
118,147
-75,157
42,991
0
-68,432
-143,588
175
-86,558
-8,505
-2,598
0
-97,486
-122,927
130,745
7,818
FY17
-3,997
78,272
40,411
-11,443
6,960
110,202
-4,829
105,373
-52,930
52,443
-33,472
-68,763
-155,165
-4,453
84,297
-32,800
-2,599
0
44,445
-5,347
6,174
827
(INR Million)
FY18E
-39,336
86,461
44,932
0
1,951
94,008
0
94,008
-65,000
29,008
0
0
-65,000
0
26,096
-44,932
0
390
-18,446
10,562
435
10,997
FY19E
-40,756
92,569
46,800
0
4,301
102,915
0
102,915
-65,000
37,915
0
0
-65,000
0
37,106
-46,800
0
0
-9,694
28,221
10,997
39,218
28 July 2017
11

Idea Cellular
Corporate profile
Idea Cellular, an Aditya Birla Group company, is
India’s third largest wireless operator with a
revenue market share of ~19%. Idea provides GSM
based telecommunication services in all the 22
telecom circles of which 15 are classified as
established service areas and 7 as new service
areas. It owns 3G/4G spectrum in 15/20 service
areas respectively.
Company description
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Jun-17
Promoter
DII
FII
Others
42.4
8.8
25.9
22.9
Mar-17
42.4
6.8
27.0
23.8
Jun-16
42.2
6.5
25.7
25.6
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Axiata Investments1 (India) Limited
Axiata Investments 2 (India) Limited
ICICI Prudential Life Insurance Company Ltd.
National Westminster Bank PLC as
Depository of First State Asia Pacific Leaders
Fund a Sub Fund of F
National Westminster Bank Plc As
Depositary Of First State Global Emerging
Markets Leaders Fund A Su
% Holding
12.9
6.9
3.4
3.2
1.3
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Kumar Mangalam Birla
HIMANSHU KAPANIA
Akshaya Moondra
PANKAJ KAPDEO
Designation
Chairman
Managing Director
Whole Time Director &
CFO
Company Secretary
Exhibit 5: Directors
Name
Rajashree Birla
Shridhir
Sariputta
Wijayasuriya
Madhabi Puri Buch
P Murari
Alka Bharucha
Hansa
Name
Sanjeev Aga
Arun Thiagarajan
Mohan Gyani
Tarjani Vakil
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells LLP
Sanjay Gupta & Associates
Type
Statutory
Cost Auditor
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY18
FY19
MOSL
forecast
-10.9
-12.3
Consensus
forecast
-6.2
-5.9
Variation (%)
75.3
108.9
Source: Bloomberg
Source: Capitaline
28 July 2017
12

Idea Cellular
NOTES
28 July 2017
13

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Idea Cellular
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information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring
Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD); MSE(Cash): INB261041231;
MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset
Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities
Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
Disclosure of Interest Statement
Analyst ownership of the stock
Idea Cellular
No
28 July 2017
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