In telecom industry, virtual consolidation is already happening

Written by Nikita Upadhyay | Nikita Upadhyay | Updated: Feb 1 2011, 04:00am hrs
From the fourth quarter onwards, Himanshu Kapania will be the face of Idea Cellular. He will be taking over charge of the fourth largest telecom company with effect from April 1. While the telco has survived the nosedive in tariffs, it still has to go through mobile number portability, the much awaited 3G services launch and imminent consolidation. Currently designated as deputy MD, Idea Cellular, Kapania is all set to do what Idea has been doing all these years sustain growth. In a conversation with FEs Nikita Upadhyay, he spoke about the strategy for newly launched circles, the idea behind promoting MNP, and plans for 3G.

Having been associated with Idea for a while now, and taking over the company in a couple of months, what is the growth path that you envisage for the company

First and foremost, Sanjeev Aga will continue as its MD till March 31, 2010. It would be fair if we draw plans and share that in public domain after having had internal discussion. Having said that, I have been a part of Idea's growth story since 1997. I launched the companys Maharashtra business, have been the circle head of Gujarat and Delhi. For the past five years, I have been heading the South and West circles.

So, the broad thrust has been on the thinking process and under Agas able guidance, the company has steered itself from being regional to a pan India player and now top notch company on the Indian telecom turf. We will continue what we have been doing for the past two to three years, that of focusing on our business in emerging markets and making sure our rural thrust continues, while making deep inroads into the enterprise and urban market.

Idea is yet to launch 3G services in the next few months. Do you think you have missed out on having the first mover advantage

The first mover advantage wont be significant in the long term. We must understand that 3G spectrum comes with a licence of 20 years. We have to ask ourselves why a consumer will opt for 3G and what will be its relevance in the Indian market. Initially, it will be a value-added service for a consumer. 3G, given the huge amount of technical challenges, hand-over and optimisation issues, customer speed experience will be of top-most priority. Its not speed of launch of 3G but building a quality network that matters. Within a few months, we will not only roll out 3G services in our 11 circles where we have spectrum, but will also collaborate with top notch operators to offer nationwide 3G service.

Will 3G drive consolidation into the Indian telecom space

Virtual consolidation has already started happening. A few years back, we had only 6-7 operators in a circle. Today, we have almost 10-12 of them. Despite this competition, 2-3 strong operator per circle have continued to increase their revenue market share by almost 3%. So, despite a huge choice, customers continue to flock operators who have quality network, who are serious players, who have a wide network coverage and have promised for a nationwide 3G. While consolidation is inevitable, it is almost impossible to predict. In the minds of consumers, virtual consolidation has already begun.

Idea has launched services in nine new circles last year. How have been they doing

For convenience, we have split our focus into established and new circles. While we continue to invest and focus to grow revenues and profits out of our established circles, we will have a calibrated launch in the new circles. It is essential for us to have an all-India presence for our customers to get roaming benefit and also have our brand across the country. If you are the 7, 8 or 9 th operator in a circle, unless consolidation happens, it is very difficult to have a business case in these new circles. To have revenues flowing, we will invest in circles where revenue and trends have been healthy. For these new circles we will continue to collaborate and cooperate with like minded players for keeping the revenues rolling.

Idea has been very active in promoting MNP. While majority thinks it wont be a game changer for India, what made you advertise so much on it

We too have been of the opinion that MNP wont be a game changer. But MNP gave us an opportunity to advertise our brand. Our pan India brand and the subsequent launch of 3G will elevate Idea to a next growth phase.

MNP is helping us make inroads into big markets, create a buzz about our brand and educate mass customers. The top four operators will be gainers with MNP.