Idea Cellular hits 52-week low; stock falls 35% in 2018

Idea Cellular hit a 52-week low of Rs 70, down 2% on the BSE, on concerns of delay in merger between the company and Vodafone India.

The stock of telecom services provider trading at its lowest level since January 20, 2017, has fallen 35% thus far in the current calendar year 2018. On comparison, the S&P BSE Sensex was up 1% during the period.

The telecom department (DoT) is waiting for Department of Industrial Policy and Promotion (DIPP) to give clearance for raising the foreign direct investment (FDI) limit in Idea Cellular to 100% before approving the merger of Vodafone India with the Aditya Birla group firm, the PTI reported quoting official sources.

Meanwhile, analysts at ICICI Securities expects Idea is likely to witness continued pricing pressure in the aftermath of Jio's price cut in January, 2018 coupled with the impact of a cut in international termination rates.

“We expect around 6.5% decline in ARPU (average revenue per user) to Rs 107 during the March 2018 quarter, which also witnessed continued down trading by high ARPU customers. Consequently, we expect around 4.6% decline in revenue at Rs 62.12 billion. On the EBITDA front, the IUC impact coupled with negative operating leverage would result in around 330 bps decline in margins at 15.5% during the quarter,” the brokerage firm said in Q4FY18 result preview.

“Idea's revenues expected to further decline by 5.8% QoQ on 9.2% dip in ARPU. We expect voice and data realisations to plummet 15.2% and 9.5% respectively, leading to 8.0% and 13.9% rise in voice and data volumes, respectively. EBITDA margin is expected to further nose-dive 260bps QoQ to 16.2%, which would swell net loss to Rs 14.4 billion from Rs 12.8 billion in previous quarter. Update on timelines regarding merger with Vodafone, strategy to tackle subscriber churn to RJIO will be key monitorables,” Edelweiss Securities said in quarterly preview.

At 03:06 pm; Idea Cellular was trading 1.2% lower at Rs 71 on the BSE, against 0.25% rise in the S&P BSE Sensex. A combined 1.13 million shares changed hands on the counter on the BSE and NSE.

IDEA Cellular Limited