Aim to deliver double digit volume growth after monsoon: Idea

A: Media has been very excited by the announcements by Bharti on data tariffs. I will like to give it a twist. It is not a tariff drop as the media reads it, but it is a pricing innovation. Currently, most voice as well as data tariffs are pay-as-you-go model and they have introduced a model where the customer has to pay upfront and then get discounts over a long period of time.

If this model does work we will be happy to match, but our overall read or calculations show that the overall realised rate is very similar to our current realised rates.

Latha: Would you agree that the trend is of data tariffs coming down?

A: We have to look at a larger picture. One, India is doing a very major investment on mobile broadband. Just to quote some numbers, before March 2015 auction it is my assessment, India was covering anywhere between 150 million and 200 million populations which could avail 3G or 4G services. During the last one and a half years India has now put up a massive mobile broadband network; almost 400,000 additional sites have come in or on its way coming up.

Capacity has increased anywhere between 7 to 8 times. The overall population under coverage has improved close to 500 to 600 million. The telecom sector itself is committed to be able to drive over the next two to three years to reach mobile broadband coverage nearly 80-85 percent of current voice coverage and likely to cover nearly a billion people who got a possibility of using 3G-4G.

As a massive coverage gets improved it is important for India to be able to move from a current abysmally low penetration of mobile broadband which is just low double digit. Only 130 million Indians currently use mobile broadband against a billion people who use voice services. For this all effort would be done by industry. Most of the effort will be around giving larger quantum of data at its same average revenue per user (ARPU) levels. We see rate is naturally going to go down but it will get compensated much more by volume. The focus of Idea Cellular is to retain its current ARPU levels and expand the number of users.

Sonia: What worried the street that apart from data pricing going down the voice business also seems quite challenged with the voice volume growth in quarter one at only 2 percent year-on-year (YoY) which is a record low. What is the way forward now?

A: If you recall in January of 2016 Idea Cellular took a detour of its well known strategy which is volume led strategy and decided to reduce the promotions that is offering for new customers as well as existing customers. It has resulted in overall voice realisation going up between 6 and 8 percent over the last two quarters. However, we found that the gap between industry realisation and Idea Cellular widened and that is a reason why subscriber growth and volume growth has been low during the last two quarters.

We are in the process of correcting that and ensuring that our realised rate is similar to the industry level realised rate. We are very confident of the subscriber growth; we have been consistently clocking 20-22 million incremental subscribers. We have been consistently clocking double digit volume growth and we are confident to be able to deliver that post the monsoon period.

Latha: Spectrum auctions starting in October, what is your plan and how much have you kept aside and which circles would you concentrate on? Do you intent to be very aggressive?

A: All I can tell you as far as Idea Cellular is concerned; we are currently present on mobile broadband in 17 circles. Our current capacity utilisation is between 20-30 percent. Our immediate focus is expansion of number of population that can come under coverage. Our approach to spectrum as a strategy will be just in time approach. The country is moving from an era which was almost for the last 20 years with a spectrum shortage.

Large capital was normally deployed for spectrum to a fresh era where almost a very large quantum of spectrum as much as 1,800 plus megahertz frequency division duplex (FDD) is coming up, which cannot be consumed in one auction which is sufficient for five to six operators to be able to use over the next decade. Idea’s strategy will be not to be able to allocate capital for spectrum which is not going to be used now. However, focus on procurement of spectrum which will be need for deployment immediately.