Speaking to CNBC-TV18, Idea MD & CEO Himanshu Kapania said its debt post auctions will rise by 70 percent and net debt to EBITDA ratio will go up to a whopping 3.5-4 from the current 1.1.
Idea cellular has been in focus after winning back 900 MHz spectrum across nine service areas. The company also acquired additional spectrum in 1800 MHz band in six key service areas.
Speaking to CNBC-TV18's Kritika Saxena, the MD and CEO Himanshu Kapania said that Idea's debt post auctions will rise by 70 percent and net debt to EBITDA ratio will go up to a whopping 3.5-4 from the current 1.1. The company has to pay over Rs 30,000 crore for the total spectrum bid.
Kapania said the company will see pressure in data prices and therefore, tariff hike across circles may be necessary. Passing on charges to customers will be inevitable, he added. The company is yet to quantify exact tariff hike but believes it will be 'significant.'
However, Idea will retain positive cash flows in the next two years. Significant jump in debt is expected to be balanced by cash flows.
Bank of America Merrill Lynch (BoAML) has raised the target price of the stock by 29 percent to Rs 205 post spectrum auction.
Interview transcript to follow shortly
Idea Cellular stock price
On March 30, 2015, at 12:32 hrs Idea Cellular was quoting at Rs 178.20, up Rs 6.75, or 3.94 percent. The 52-week high of the share was Rs 186.90 and the 52-week low was Rs 129.20.
The company's trailing 12-month (TTM) EPS was at Rs 6.88 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 25.9. The latest book value of the company is Rs 44.09 per share. At current value, the price-to-book value of the company is 4.04.
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