A brief Financial Valuation of IDEA Cellular Limited, providing the valuation multiples and the company background and Competition benchmarking.

1. July 3
IDEA
Cellular
Limited 2011
In-depth financial analysis of Idea Cellular Limited, supplemented by Company
competitive benchmarking against competitors in the market.
Report
Analyst Name:
Rajat Dhar

2. GSIC Industry: Telecom | Sub Industry: Cellular Telecom |Website: www.ideacellular.com
July 3, 2011 [IDEA CELLULAR LIMITED]
IDEA CELLULAR LIMITED
Key Stock Indicators
Bloomberg Ticker: IDEA:IN CMP(as on 07 Jul 2011): `81.35 Shares Outstanding(Mn): 3,303.757
Face Value/per Share: INR 10.0 52-Week Range: `(82.55-55.65) Beta vs Sensex: 0.847
DIV. Yield(%): 2.4 Market Cap (as on 01 Jul’11-[in Mn]) 260,501.200 90-Day Volatility: 28.220
Idea Cellular Limited was incorporated in 1995. The company is among the Key Financial Indicators
top five mobile telephony players in India with an 11 per cent all-India (in Mn) Mar-08 Mar-09 Mar-10
rd
subscribers market share. Idea is the 3 largest wireless service provider
Revenue 67,199.90 99,164.50 1,18,957.70
in India. Idea added 14 out of its total 22 service areas in the past four
years. Today it is a pan-India player with commercial operations in all 22 EBITDA 22,712.80 28,165.00 29,262.50
service areas. Idea holds 900MHz spectrum in 9 service areas covering PAT(INR Mn) 10,443.90 10,082.10 10,536.60
~48% national revenue. Idea holds 16 per cent stake in Indus Towers, a PAT Margins
joint venture with other telecom majors Bharti Airtel and Vodafone. Indus (%) 16.59 9.27 8.67
Towers is the world's largest tower company with over one lakh towers. In EPS (INR/sh.) 3.96 3.01 3.06
2007, Idea was listed on the National Stock Exchange (NSE) and the
OPM % 33.8 28.4 24.6
Bombay Stock Exchange (BSE).
NPM % 15.54 10.17 8.86
KEY HIGHLIGHTS Source: http://www.bseindia.com/
Idea rings in the ‘Power of 3G’ Share Holding Pattern
IDEA Cellular, India’s third largest mobile operator today announced on Indian
March 28, the launch of its ‘Gold Standard’ 3G services that will catapult 30.51% 0.58%
(Promotor)
mobile communication services and transform user experience. The third 38.85%
generation of mobile communication systems, 3G, lets customers use an Institution
extensive range of high-end data services on a wide variety of handsets
and other devices. FII
Idea announced the launch of 3G services on its network in MP & 8.35% 15.03% DII
Chhattisgarh, Gujarat and Himachal Pradesh. To anchor the occasion, Idea
unveiled a new 3G logo. The new branding will be implemented throughout 6.68%
India, across all customer touch points
Indexed Price Chart
Idea Cellular Limited Looking At Options To Monetize Tower Business
Outside Of Indus Towers JV-DJ
Idea Cellular Limited is looking to monetize the 9,000 telecom towers that 150 30000
25000
it owns outside the Indus Towers Ltd joint venture (JV) and plans to use 100 20000
15000
50 10000
Stock Performances vis-à-vis market 5000
Returns(%) 0 0
1.8.10
1.4.10
1.6.10
1.2.11
1.4.11
1.6.11
1.10.10
1.12.10
YTD 1-m 3-m 12-m
Idea Cellular Ltd. 16.57 15.24 22.21 37.23
NIFTY 50 -4.66 5.27 -1.69 14.54
Source: http://morningstar.com/ BSE(vol) SENSEX IDEA
FinExpertise | Confidential

3. July 3, 2011 [IDEA CELLULAR LIMITED]
the funds to reduce its debt. Plans for monetizing the towers include hiving them off and selling them to a
telecom tower operator. (Jones)
Idea Cellular Limited Moves TDSAT Against DoT Notice To Cancel Licence-Business Standard
Idea Cellular Limited has approached sectoral tribunal TDSAT against a DoT notice to cancel its licence in Punjab
for violating merger and acquisition (M&A) norms. On April 21, the Department of Telecom (DoT) issued show
cause notice (SCN) to Idea as to why its licence for the Punjab circle should not be cancelled on violation of
M&A norms. The company has also been slapped with Liquidated Damages (LD) for not rolling out its services as
per the norms in the same circle. As per the terms, a licensee is not allowed to merge or amalgamate with any
other company for the first three years. (Standard)
Bharti Airtel Limited, Vodafone Essar Ltd. And Idea Cellular Limited Close To Signing 3G Pact-DJ
Bharti Airtel Limited, Vodafone Essar Ltd. and Idea Cellular Limited are close to signing an agreement to share
their third-generation radio bandwidth. The agreement, if signed, will allow the companies to bring down their
average cost of radio bandwidth by accessing each other's networks in areas where they don't own 3G licenses.
The three companies had separately said earlier that they were in talks with other 3G license owners for tie-ups
to share networks in areas where they didn't hold licenses. (Jones)
BACKGROUND
Incorporated as Birla Communications Limited on March 14, 1995 & granted a certificate of commencement of
business on August 11, 1995. With effect from January 1, 2001 following our merger with Tata Cellular Limited
the joint venture agreement between AT&T Corporation & Grasim Industries Limited dated December 5, 1995
was replaced by a shareholders agreement dated December 15, 2000 entered into between Grasim Industries
Limited on behalf of Aditya Birla Group, Tata Industries Limited on behalf of Tata Group & AT&T Wireless
Services Inc. on behalf of AWS Group following which name was changed to Birla Tata AT&T Limited on
November 6, 2001. Consequent to the introduction of 'Idea' brand, name was changed to Idea Cellular Limited
on May 1, 2002. (Solutions)
COMPETITIVE POSITION
Peer Comparison
Idea Cellular Bharti Airtel Reliance Comm MTNL
Revenue 1,53,890.00 3,80,158.00 1,21,297.70 38,412.13
EBITDA 31,280.70 1,30,503.00 9,128.70 -9,615.18
EBITDA margins(%) 20% 34% 8% -25%
PAT(INR Mn) 8,446.00 77,169.00 -7,579.90 28,269.53
PAT margin (INR Mn) 5% 20% -6% -74%
EPS (INR/sh.) 2.56 20.32 -3.67 -44.87
PE(x) 31.78 19.59 -26.61 -0.99
P/BV (x) 22.76 n.a. n.a. n.a.
n.a: Not Available (Mar-11)
Source: http://www.bseindia.com/
FinExpertise | Confidential

4. July 3, 2011 [IDEA CELLULAR LIMITED]
FINANCIAL PRO FILE
Idea Cellular Bharti Airtel Reliance Comm MTNL
LTP 81.35 398.1 97.65 44.3
52 W H / L 82.55 / 55.65 409.45 / 277.40 195.40 / 74.65 72.75 / 38.00
Sales 1,53,890.00 3,80,158.00 1,21,297.70 38,412.10
PAT 8,446.00 77,169.00 -7,579.90 -28,269.50
Equity 33,032.70 18,988.00 10,320.10 6,300.00
OPM (%) 20.33 34.33 7.53 -25.03
NPM(%) 5.49 20.3 -6.25 -73.6
Source: http://www.bseindia.com/ (Mar-11)
Revenue grows at ~31.81% but PAT plummeted by ~6.83%.
Top-line grew by at a CAGR of Key Financial Indicators
~31.81% between FY’08 and (in Mn) Mar-08 Mar-09 Mar-10 Mar-11
FY’11. Revenue 67,199.90 99,164.50 1,18,957.70 1,53,890.00
EBITDA 22,712.80 28,165.00 29,262.50 31,280.70
However, EBITDA, in the same
PAT(INR Mn) 10,443.90 10,082.10 10,536.60 8,446.00
tenor showed a CAGR of ~11.26%,
PAT Margins
while EPS, OPM% & NPM% (%) 16.59 9.27 8.67 5%
showed a downward trend. EPS (INR/sh.) 3.96 3.01 3.06 2.56
OPM % 33.8 28.4 24.6 20.33
Even after global recovery we can
NPM % 15.54 10.17 8.86 5.49
see steady decrease in the PAT
Margins(%) from 16.59% in 2008
to 5% in 2011.
INDUSTRY PROFILE
The Indian Telecommunications network is the third largest in the world and the second largest
among the emerging economies of Asia. Today, it is the fastest growing market in the world. The
telecommunication sector continued to register significant success during the year and has emerged
as one of the key sectors responsible for India’s resurgent India’s economic growth.
It has also undergone a substantial change in terms of mobile versus fixed phones and public
versus private participation. The preference for use of wireless phones has also been predominant
in the sector.
Participation of the private entities in the telecom sector is rapidly increasing rate there by
presenting the enormous growth opportunities. There is a clear distinction between the GSM and
CDMA technologies used.
With increasing penetration of the wireless services, the wireline services in the country is
becoming stagnant. On the other hand, Broadband demand has picked up and promises to stabilise
fixed line growth. (CCI)
FinExpertise | Confidential

5. July 3, 2011 [IDEA CELLULAR LIMITED]
Focus Charts:
Movement in Operating & Net Margins EPS (INR/sh.)
40 OPM % NPM % 5
35
4
30
25 3
20
15 2
10 1
5
0 0
Mar-08 Mar-09 Mar-10 Mar-11 Mar-08 Mar-09 Mar-10 Mar-11
0.10 12,000.00
0.05
10,000.00
0.00
8,000.00
Mar-08 Mar-09 Mar-10 Mar-11
-0.05
6,000.00 MANAGEMENT
-0.10
Name Designation
4,000.00
-0.15 Himanshu Kapania Managing Director
Sanjeev Aga Director
2,000.00 Company Secretary & Compliance
-0.20
Pankaj Kapdeo Officer
-0.25
PAT(INR Mn)
0.00
PAT growth (y-o-y) Ambrish Jain Deputy Chief Executive Officer
Shareholding Pattern (%)
Mar-11 Dec-10 Sep-10 Jun-10 Mar-10
Promoter and Promoter
Group 46.04% 46.96% 46.97% 46.98% 46.99%
FII 9.90% 9.70% 7.58% 6.05% 7.40%
DII 7.91% 6.99% 7.76% 7.71% 7.52%
Non Institutions 36.15% 36.35% 37.69% 39.26% 38.09%
Source: http://www.bseindia.com/
FinExpertise | Confidential

6. July 3, 2011 [IDEA CELLULAR LIMITED]
Bibliography
CCI. Corporate Catalyst India. 8 July 2011. <http://www.cci.in/>.
http://www.adityabirla.com/. <http://www.adityabirla.com/>.
Jones, Dow. Reuters. 27 June 2011. <http://in.reuters.com/>.
Solutions, Dion Global. Money Control. 8 July 2011 <http://www.moneycontrol.com>.
Standard, Business. Reuters. 29 April 2011. <http://in.reuters.com>.
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Institutional/Retail: Rajat Dhar
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