Idea Cellular, which has increased its capital expenditure target for FY16 to Rs 6,000-6,500 crore, will spend a similar amount during FY17, as it looks to strengthen its mobile data infrastructure, managing director Himanshu Kapania said on Wednesday.
The telco had earlier estimated its FY16 capex to be in the region of Rs 5,000-5,500 crore. However, the company revised its estimates as it advanced the launch of its 4G services to FY16 from FY17.
On Wednesday, Kapania told analysts that Idea Cellular aims to sustain 30% Ebitda margins in the forthcoming quarters, and the capital expenditure during FY 17 will depend on that.
“Going ahead, we will have to cover larger market spaces. However, we expect the FY17 capex to remain similar to that of FY16,” said Kapania.
Analysts say Idea Cellular’s net profit could remain under pressure in the coming quarters, as the telco gradually begins to launch its 4G services from 2016, which, in turn, is expected to keep capex levels high and could further create pressure on interest costs.
“A large portion of the capex during FY16 will be used to expand mobile broadband infrastructure sites and fibers,” he added.
Idea Cellular added 3.7 million mobile data customers during the April-June period. According to the company, 3G data volume growth led the overall mobile data traffic growth – on both 2G and 3G networks – to nearly double to 62.7 million MB from 32.1 million MB in the past year compared to the previous year.
However, the incremental data volume growth has slowed down, which is a concern for the company.
“In the last one year, 20 million Idea customers upgraded to 3G enabled handsets. Of this, only 8 million odd customers use our 3G services. This needs to improve,” Kapania said.