Idea to spin off Karnataka and Punjab licences; 3Q results announced

21 Oct 2008

Reuters is reporting that Indian cellco Idea Cellular is set to spin off its universal access service licences (UASLs) in the operating circles of Karnataka and Punjab, regions where its recent acquisition Spice Communication also has operations. The move comes as the operator looks to comply with mergers and acquisitions guidelines following requests from the Department of Telecommunications (DoT) to surrender one of the licences; under existing regulations no company can own more than 10% in any two competing companies within a telecoms circle. Reports from Indian news source Business Standard have suggested that Idea is considering the creation of an entirely new company, in which it would hold less than the allowed 10%, also confirming that the company board has given its in-principle approval to demerge the UASL licences for the two circles.

In separate but related news, Idea also announced results for the three months ended 30 September 2008, reporting a drop in net profit of 34.6% year-on-year; net profit for the quarter was INR1.441 billion compared to 2.203 billion at the end of September 2007. Earnings before interest, tax, depreciation and amortisation margin also fell to 26.3%, down 6.4% from 32.8% last year. The operator attributed the drops to the increased spend on brand awareness, the continued rollout of new cell sites and the launch of services in Mumbai. Additionally, during the three-month period the cellco reported adding approximately 3.2 million customers, bringing its total subscriber base to just below 30.4 million.