Will wait to see impact of Reliance Jio Infocomm's entry: Idea Cellular's Himanshu Kapania

Written by Rhik Kundu | Updated: Aug 26 2014, 15:29pm hrs
Idea Cellular, Indias third-largest mobile telephony firm by subscribers, was the biggest beneficiary of mobile number portability (MNP) which allows users to switch from the existing telecom operator to a new one in June, the latest month for which data are available. Ideas managing director and chief executive Himanshu Kapania, in an interview with Rhik Kundu, says his company is well-poised to leverage the network it has created in Indias hinterland to aggressively upsell data services to rural customers, revenues from whom were mostly voice-driven thus far. Edited excerpts:

The last few years have been tough for the telecom sector with intense competition, predatory pricing and slowing industry growth. But Idea has grown significantly during this period. How did you

manage to do so

From the beginning, our key focus was to concentrate on the task at hand and not worry about headwinds. While most operators focused on metros and urban markets, we focused on rural areas in Indias hinterland that had low telecom penetration. We never followed a secular allocation of resources and invested heavily in our 15 well-established circles. Today, we contribute over 30% of the aggregate telecom revenues of these circles and are among the top three players.

How big a role will data services play in your future strategy

Mobile data usage per subscriber on our network is 200 MB (megabytes) at present, and this should increase to 1 GB (gigabytes) in the 4-5 years. Our strongest franchise is our consumer base of 140 million people. Our idea is to transfer the life of our consumers from being pure voice users to help them have an online lifestyle. We spent Rs 21,000 crore to buy spectrum over the last three years both 3G and 4G. A large part of this investment was to buy spectrum in rural markets. We were among the first to reach smaller towns with a population of 25,000-100,000 with data services. We started our handset business to primarily supplement the current handset manufacturers who are more focused on urban markets. Our recent ad campaign, Uloo Banao, is focused around the digitally laggard customer and first-time users. While we havent made 3G investments in big metropolitan cities like Mumbai, Chennai, Bangalore and Kolkata, we have made deep inroads in tier II cities like Pune, Ahmedabad, Hyderabad, Indore and Surat. The one metro where we won spectrum and will soon launch 3G services is Delhi. We dont believe in trying to outdo competitors in large towns and metros, and would rather tap into underserved consumers in smaller cities.

Reliance Jio Infocomm is expected to launch competitive 4G services this fiscal. How are you gearing up for the competition

We welcome our rivals. There is lot of work to be done in terms of educating consumers and all operators need to work on this together. We will wait to see the impact that Reliance Jios entry will have in terms of bringing down prices of equipment and devices. With time, the 4G ecosystem will develop in India and reach an optimum level with low-cost 4G devices available. We are preparing for such a scenario. It is our assessment that such an ecosystem is at least three years away, if not more. Of the 15 circles we operate in, we have currently procured 4G spectrum in eight circles, which represents around 56% of our overall consumer base.

What sort of growth are you looking at

We are looking at 18-20% year-on-year revenue growth and plan to add 15-20 million subscribers each year over the next 3-4 years. We will manage our tariff policy so that we can continue to achieve this growth.