Despite regulatory challenges, Idea Cellular witnessed growth on the operational and financial fronts during 2013. The operator made efforts towards increasing the uptake of its data services and has identified the segment as a key focus area for 2014 as well. Going forward, it expects more clarity on regulatory and policy issues, which will pave the way for a brighter future for the Indian telecom industry.
Himanshu Kapania, managing director, Idea Cellular, talks to tele.net about the company?s performance in 2013, the key growth drivers and the way forward?
How has been Idea Cellular?s performance in the past year?
Idea Cellular has stood the test of time with its consistent and strong performance. It has held its ground as the third largest mobile operator in India, both in terms of revenue and subscriber base. In the past two years, Idea maintained a steady compound annual growth rate of 21 per cent in revenue, much higher than the 12.5 per cent recorded by the industry. Also, the company?s revenue market share (RMS) steadily increased by 23.6 per cent during this period, and the overall growth was complemented by a steady increase in earnings before interest, taxes, depreciation and amortisation. During 2013, when the telecom industry lost over 13 million connections, Idea recorded the highest net additions of 14.47 million.
The operator?s strong performance on parameters such as active subscribers, minutes of usage, cash profits, mobile number portability (MNP) and 3G has resulted in a sharp improvement in its competitiveness. Idea increased its RMS from 14.3 per cent in the quarter ended September 2012 to 15.8 per cent in the corresponding quarter in 2013 ? it is the only operator to record a growth of over 1 percentage point over the past 12 months. Idea has maintained its position at the top of the visitor location register chart with over 93 per cent active subscribers. In addition, with a net gain of over 8.3 million users as of December 31, 2013, it continues to be the operator of choice with the highest net gain on MNP.
In 2013, Idea launched new international roaming packs offering huge benefits on both voice and data services across 40 countries, thereby enabling users to enjoy seamless connectivity at affordable roaming rates. It also introduced the Idea i-Plan, which allows post-paid customers to customise and select their plans depending on their usage pattern, needs and requirements.
What is your view on the current policy and regulatory environment?
For the telecom sector, the past year has been another roller coaster ride, but recent developments promise a more stable future. The upcoming spectrum auctions in February 2014 will set the tone for industry growth. Though the focus will be on the metro towns owing to the renewal of licences next year, there will be some activity in other circles as well. Although a large quantum of spectrum in the 1800 MHz band is being put up for auction, there are several issues that need to be resolved. An area of concern is contiguity of the spectrum being auctioned. Even though the stated policy direction is ?broadband for all?, there seems to be no commitment for offering the spectrum blocks that will allow the auction winners to launch next-generation services.
What steps are being taken to ensure greater uptake of data services?
Idea has adopted a three-pronged approach to drive data usage on its network: enhance network coverage; strengthen sales and distribution channels; and offer affordable products, services and devices. In the past year, the company reduced data tariffs across India to not only drive data usage by existing users but also to attract new users. Recently, the company announced a reduction of almost 90 per cent in data tariffs to catalyse service adoption. Idea has brought 2G and 3G data tariffs at par, further fuelling data usage by mobile subscribers. It entered the devices category two years ago, and has introduced several Idea-branded 3G smartphones.
The company would continue to focus on improving the data experience of its users and expects data to contribute 15-18 per cent to service revenues in the next three years.
What initiatives are being taken to improve the quality of service in semi-urban and rural areas?
With two out of every three new Idea subscribers coming from rural and semi-urban areas, the operator has been focusing on enhancing the service experience for these consumers. Idea?s deep-rooted network is supported by a strong sales team, which comprises locally employed people to serve customers on a daily basis. The operator?s special awareness programmes targeted at these users ensure that a customer is constantly updated and apprised of new offerings. The operator has set up exclusive service centres (Idea Point and Idea Service Point) to meet the requirements of customers in semi-urban and rural areas.
What measures are being taken by the company to ensure energy efficiency across its operations?
In 2012, Idea launched its Green Idea Programme, which is aimed at carbon emission reduction through the use of clean energy solutions including hydrogen, solar, and battery-DG hybrid systems, and energy efficient hardware; and optimisation of generator and air-conditioner usage. Further, about 90 per cent of Idea?s over 100,000 telecom sites are operating from shared locations, which has helped the company reduce carbon emissions and operating costs. Idea?s green initiatives were recognised globally in 2013 through a grant of over $1 million from the United States Trade and Development Agency for funding a pilot project involving the deployment of solar hybrid methanol-based fuel cells at telecom sites in India.
What are the company?s growth and investment plans for 2014?
The capex guidance for 2013-14 is Rs 35 billion, excluding any spectrum-related payout. Idea has invested in network expansion, which has led to growth in service usage. The improvement in capacity utilisation, brand popularity and quality of consumer service, along with a strong balance sheet, underscores Idea?s ability to benefit from long-term opportunities. The company intends to acquire more spectrum by participating in the upcoming auction, and the financial plan for the same has been prepared.
What trends do you foresee in the sector?
With the screens of smartphones increasing in size, and a reduction in their prices and in data tariffs, there has been a clear indication of robust growth in mobile internet usage. Spectrum auctions, mergers and acquisitions, and the upcoming licence renewals will be some of the key events in the Indian telecom sector in the near future.
What new business opportunities are emerging for telecom operators?
The mobile phone is increasingly becoming the first screen and, on many occasions, the only screen for a large population in rural areas where TV and desktop computers are still a distant reality due to lack of access and power unavailability.
Further, the growth of mobile broadband and the robust telecom infrastructure in rural and urban India have opened up several opportunities. The sector can be credited for not only empowering rural communities socially and economically, but also enabling other critical basic services such as health, education and banking through the mobile platform. These services will offer huge business opportunities for the sector. M-banking is a major step forward in achieving the government?s target of financial inclusion. The banking and financial sector has limited access to the country?s population as compared to the overall teledensity of 80 per cent. Leveraging the mobile platform would be the only way for providing banking and financial services to the unbanked population.
Mobile governance is the next big opportunity, both for the government and the industry. It facilitates transparency, convenience, reach and scale-up for the roll-out of various development programmes including those related to the National Rural Employment Guarantee Act, issue of Aadhar cards, and distribution of Aakash tablets.
