Idea Cellular MD Himanshu Kapania drafts mobile Internet growth strategy

Himanshu Kapania
Idea Cellular Managing Director Himanshu Kapania says the Indian telecom network operator has devised growth strategies to take its mobile Internet business coverage to one billion population in the next 3-4 years from the present 250 million.

The Aditya Birla group company — promoted by Kumar Mangalam Birla — has recently started launching 4G LTE services, after finding success in 3G data business. It is planning to launch 4G in 750 towns. For comparison, Airtel 4G last year crossed more than 330 towns. Reliance Jio Infocomm plans 4G network in 18,000 towns in phases.

Idea Cellular and 4G strategy

The telecom network operator is launching 4G services in 75 towns. Out of the 75 towns, 45 towns do not have 4G coverage.

“We will be the first to launch in majority of these locations selected by us. There is huge potential in the small towns and hinterlands of the country if they are scientifically selected,” Himanshu Kapania told Hindu BusinessLine.

More than 55 million subscribers of Idea Cellular own a smartphone that supports 3G or 4G network. Out of the 55 million, 6 million have 4G devices. E-commerce channels like Flipkart and Amazon India have played a larger role in accelerating the demand for 4G smartphones.

The main challenge for Idea Cellular is that only 20 million are using its 3G services. “The task of telecom operators like us is to make sure that the next round of 500 million consumers, who understand the power of voice, will have to be educated on the powers of internet,” Himanshu Kapania said.

Idea Cellular investment strategy

# finding difficulties in enhancing 3G user base from around 20 million
# making investment in 4G network in 750 plus towns
# 4G to focus will be in small towns
# will not make substantial increase in Capex related investment in coming years
# may not make investment in 2G network after reaching one billion population coverage

Idea Cellular in last 5 years

Idea Cellular has 285 MHz spectrum at present against 100 MHz spectrum in 2010. The company added 130 million subscribers in the last five years.

The company generated EBITDA of more than Rs 10,000 crore last year as compared with Rs 1,500-2,000 crore in 2010. During the current fiscal, Idea Cellular’s EBITDA will be Rs 12,000-13,000 crore.

Idea Cellular has 60-62 percent of its subscribers coming from rural and small markets. The total user base of Idea Cellular is 175 million subscribers.

The Mumbai-headquartered telecom operator is expecting the next round of 300 million users to come from small towns and cities.

Idea Cellular has made an investment of Rs 40,000 crore to acquire spectrum during the auctions in 2014 and 2015 to renew spectrum and buy 3G and 4G spectrum.

The company has been spending Rs 3,000-3,500 crore towards Capex in the last 3-4 years. Idea will continue to make similar investment in future. “When our network coverage crosses about 1.1-1.2 billion population, we will probably then stop our investments in 2G,” Himanshu Kapania said.

Idea Cellular is not willing to meet the Rs 60,000 crore Capex plan announced by Bharti Airtel. Airtel will be making the enhanced investment in the next three years to boost network quality and coverage on 2G, 3G and 4G networks.

Recently, Idea Cellular increased its Capex guidance to Rs 6,500 crore or nearly $1 billion for fiscal 2016 from the earlier Rs 3,500 crore.

“We are announcing 40,000-45,000 base stations for 2G, 3G and 4G network in the next one year and we believe in the next three years our wireless broadband network will cover 750-800 million population,” Himanshu Kapania said.

The strategy announced by Idea Cellular indicates that the company is not making additional investment to boost mobile Internet business.

Baburajan K
[email protected]