Idea Cellular shares slumped 6 per cent to their 52-week low on Tuesday, after the mobile carrier posted a 74 per cent drop in its June quarter net profit. India’s third largest telecom company posted a net profit of Rs 220 crore in Q1, missing a consensus forecast of Rs 435 crore, according to Thomson Reuters data.
Idea Cellular attributed the profit slump to one-time finance cost for spectrum and lower voice revenues. Idea Cellular’s voice volumes declined 1 per cent sequentially, while growth in the data segment also moderated.
Idea, along with India’s biggest telecom company Bharti Airtel Ltd and Vodafone’s India unit, have been investing heavily and slashing rates for their 3G and 4G services to retain customers as an impending launch of Reliance Industries telecom service launch expected to happen this year.
Idea said almost 1.8 million customers are now on Idea’s 4G network while Reliance has a subscriber base of 1.5 million, according to its latest annual report.
Brokerage CLSA downgraded Idea Cellular to “sell” from “outperform” and cut the target price on the stock to Rs 94, citing high burden of spectrum. Idea’s margins declined on higher network operating costs, it said.
As of 10 a.m., Idea Cellular shares traded 5.14 per cent lower at Rs 97.80, underperforming the broader Sensex that was down 0.10 per cent.