India’s third-biggest mobile phone company Idea Cellular Ltd., on Wednesday said its net profit for the July-September period increased 7% to Rs 809.3 crore from Rs 755.9 crore a year earlier, weighed by lower interconnection charges and pressure on mobile data charges.
During the just-ended quarter, Idea Cellular’s sales grew 14.7% to Rs8689.1 crore, the company said in a filing to the stock exchanges. The company attributed the slow growth in revenue to increase in number of low-paying users in rural India, and a seasonal slowdown, when users tend to make less number of phone calls and text messages.
The company’s margin on earnings before interest, depreciation, tax and amortisation, or Ebidta margin expanded to 35.9% during the quarter from 32.9% a year ago, but dropped from 36.7% margins it had during the past quarter.
The Telecom Regulatory Authority of India has reduced the interconnect charges for incoming phone calls from 20 paise/ minute to 12 paise/minute from May 1, and reduced the national roaming call charges and SMS rates between 20%-75%. Additionally, operators are competiting with each other by slashing down tariffs for using internet on mobile phones which has put pressure on earnings of companies such as Idea Cellular, it added.