How Idea Cellular regains mobile Internet growth despite Jio and Airtel

Idea Cellular investment in 3G and 4G sitesThe strategy of Idea Cellular CEO Himanshu Kapania was to follow the footsteps of Reliance Jio and Airtel to regain growth in the mobile Internet space in India.

Idea Cellular’s growth strategy paid off well during the second quarter ended September 2017 as it achieved growth in mobile Internet user base from 2G, 3G and 4G and broadband subscriber base from 3G and 4G.

Last week, Idea Cellular said its total data subscribers – on 2G, 3G and 4G networks – marginally rose to 38.195 million in September quarter from 38.122 million in June quarter but fell from 42.233 million in Q4FY17, 48.583 million in Q3FY17 and 54.063 million in Q2FY17.

The number of broadband subscribers of Idea on 3G and 4G networks increased to 29.606 million in September quarter from 26.357 million in June quarter and 24.684 million in Q4FY17, 27.026 million in Q3FY17 and 30.703 million in Q2FY17.

The main strategy that assisted Idea Cellular to regain growth was to offer unlimited voice calls in all telecom circles along with unlimited SMS and national roaming in select locations. Idea Cellular has followed special pricing strategy focusing on its emerging circles. Idea Cellular offered special data and voice plans at higher price in its leadership circles, while emerging circles received the same plan at relatively low price.

Idea’s Internet coverage

The population under Idea Cellular’s 4G sites has nearly tripled from ~170 million in Q2 FY 2017 to ~450 million (38.1 percent) in Q2 FY 2018, reflecting the telecom operator’s growth strategy in 4G. The company offers 3G services across 15 circles using 17 carriers which can be redeployed for 4G as and when majority of the customers upgrade their devices to 4G.

Idea Cellular offers its 2G services to nearly 1 billion Indians spread over 395,142 towns and villages. Idea has installed 133,685 broadband sites (2G sites at 131,239) and offers its high speed broadband internet services to 568 million Indians spread across 121,446 towns and villages.

Idea Cellular has steadily increased optical fibre cable (OFC) coverage to 150,500 KM in Q2FY18 from 148,100 KM in Q1FY18, 144,600 KM in Q4FY17, 133,800 KM in Q3FY17 and 126,000 KM in Q2FY17 in order to provide backbone and capacity for 2G, 3G and 4G services in India. Idea said it added nearly 50,000 KMs of fibre in the last two years.

The Indian telecom operator has also increased the number of 2G cell sites to 131,239 from 131,059 131,486, 132,362 and 130,633 during the last four quarters.

Idea Cellular has increased the number of broadband sites for 3G and 4G subscribers to 133,685 from 117,386, 110,054, 100,615 and 85,412 in the previous quarters.

Idea Cellular has multiplied its broadband sites by 3.4 times in the last two years to 133,685, higher than the unique 2G sites built over a span of last 21 years.

Its wireless broadband network on 3G and 4G networks reached population coverage of 568 million Indians (46.9 percent of Indian population) spread over 121,446 towns and villages in 22 circles.

The 4G population under coverage has nearly tripled from 14.8 percent (~170 mn) in Q2FY17 to 38.1 percent (~450 mn).

Idea Cellular will be making investment for the deployment of 2300 MHz or 2500 MHz spectrum band in many of its leadership markets during the current financial year.

The company will introduce its VoLTE by early calendar year 2018.

The Capex spend for the second current quarter was Rs 19.7 billion.

Idea Cellular and Vodafone India have entered into Active Infrastructure sharing arrangement to avoid duplication of spends.

Idea revenue

The drop in Idea Cellular’s Q2 revenue reflects the competition from Reliance Jio and Airtel. ARPU of Idea Cellular fell to Rs INR 132 from INR 141, INR 142, INR 157 and INR 173 in the previous quarters.

Voice ARPU of Idea Cellular fell to INR 101 from INR 108, INR 107, INR 114 and INR 122 in the previous quarters.

Data ARPU of data subscriber on 2G, 3G and 4G networks fell to INR 105 from INR 119, INR 110, INR 111 and INR 130.

Gross revenue fell to INR 74,654 million from INR 81,665 million, INR 81,261 million INR 86,627 million and INR 93,002 million in prior quarters.

Opex of Idea Cellular was INR 59,638 million, INR 62,911 million, INR 60,063 million, INR 64,710 million and INR 64,630 million.

Idea Digital business update

Idea Cellular said it will be charging fee for its apps which are currently available for free. The mobile operator did not share additional details.

My Idea’ app has 24 million subscribers. Idea Music Lounge, Idea Movie Club, and Idea Game Spark have over 10 million Idea subscribers. Idea Music has over 4.5 million customers. Idea Movie and Live TV has over 4.5 million customers. Idea Games has nearly 1.5 million customers.

Baburajan K