Livemint: September 21, 2016
New Delhi: Mobile data adoption will take off in India just the same way as voice did much earlier, telecom operator Idea Cellular Ltd said.
Idea expects greater competition among India’s four large telecom operators, the company said at a presentation made at the two-day CLSA Investor Forum 2016 in Hong Kong.
The voice market will consolidate to five-six companies and Idea sees itself garnering higher incremental voice market share.
Idea said industry gross revenue is forecasted to grow at a compound annual rate of 8.7% over the next five years while mobile data revenue will grow at a much faster 30% during the same period. It will launch its own digital services including Idea TV, Idea Videos, Idea Chat and storage between January and March 2017.
Idea claimed it had the highest incremental subscriber net additions of 74.8 million in the past four years, ahead of Bharti Airtel Ltd and Vodafone India. The claim comes at a time when Reliance Communications Ltd has merged its wireless business with Aircel Ltd to command India’s third largest subscriber base, jointly having 187.64 million subscribers and narrowing the gap with leaders Bharti Airtel with 255.7 million and Vodafone India with 199.4 million.
“Idea is currently focused on expanding coverage rather than build capacity,” the company said.
HSBC Global research in a report dated 25 August said, “RMS (revenue market share) for Idea and Vodafone remained flat this quarter (Q1, 2017). Further, Idea Cellular may revisit its voice tariffs going forward and this may result in a drop in voice realizations going forward (however, subscriber growth may pick up).”
After Reliance Jio’s official launch on 5 September, analysts at various brokerage firms expect Idea’s liquidity and margins to be strained as it tries to retain market share.
Consolidated profit at the Aditya Birla Group company fell 74.21% in the April-June quarter to Rs220.42 crore from Rs854.81 crore a year ago despite seeing consolidated revenue rising 7.9%. The company cited impact of acquisitions made in the 2015 spectrum auctions on the weakening financial performance.
Idea currently holds 270.7MHz spectrum, the lowest among Airtel, Vodafone and Reliance Jio, and has the capability to provide 4G LTE services fully in only 11 circles across India, lacking spectrum strength in Delhi, Mumbai and Kolkata. This means Idea must bid aggressively in the auctions starting 1 October.
“Unreasonable spectrum pricing (linked to 2015 prices) to be a major constraint. As a result, demand unlikely for 700MHz spectrum band. Timing of spectrum acquisition calibrated to market evolution & concomitant data capacity demand rather than block capital ahead of time,” the company said in its presentation.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.