"Rural imagery does not make us a rural brand"

Written by Malabika Sarkar | Malabika Sarkar | Updated: Aug 4 2009, 07:41am hrs
Idea Cellular, the fifth largest telecom operator in the country, has closed the June 2009 quarter with revenue of Rs 2,975.9 crore, and profit after tax of Rs 297 crore. Its revenue lagged street expectations due to a sharp fall in average revenue per user per month (ARPU) and slower growth in revenue from its subsidiary Spice Communications. In this interview to FEs Malabika Sarkar, Pradeep Shrivastava, chief marketing officer, Idea Cellular, talks about how it plans to improve ARPU.

How has last years buyout of Spice Communications beefed up your network coverage and subscriber base

Idea, as you know, has been the fastest growing mobile operator over the last two years not only in terms of percentage growth, but also in terms of the absolute increase of revenue share as well as absolute increase in subscriber share. And part of it has been because in circles where we are strong. We have continued to go to the remotest rural areas. For example, 96% or the entire footprint of Kerala has been covered barring some tribal and hilly areas.

So, one of the factors behind this growth factors is the kind of initiatives we have undertaken in existing circles; the other is the expansion in standalone circles such as Bihar and Mumbai where we have started for the first time. We should be launching in Chennai any time in the coming month or so. The acquisition of Spice Karnataka and Spice Punjab are part of this rapid expansion strategy, and we are optimistic about these two markets. These two are strong circles that have higher quality of spectrum and obviously it is natural for Idea to look at markets like Punjab where Spice has been a strong player.

Spice enjoys a strong reputation with its customers. Our spectrum quality is very good and in markets such as Madhya Pradesh and Andhra Pradesh we are No 1 and we see healthy trends.

Low ARPU has been a bugbear for cellular service operators. Going forward, what are the key services that can go about increasing ARPU

Low ARPU is identified as a matter of concern and therefore investments are large in this. By design the telecom operators have provided the most affordable tariffs. They have offered lifetime validity at reduced rates, and they have provided even complementary products such as handsets at increasingly lower prices. By design, when you offer a product at lower price, ARPU is automatically expected to come down. We are actually going to the middle and to the bottom of the pyramid. This, by design, would offer lower ARPU. Moreover, because of the policy framework we have eight to nine active operators and the potential of another 14 to15 operators. Competition forces new operators to bring in invitation prices, which reduces the tariffs. This is also another reason why the ARPU is coming down. The pressure to increase the ARPU with value-added services is one initiative that operators, including Idea, are focused on.

Most of Ideas television commercials have portrayed the usage habits of semi-urban to rural consumers in great detail. Are you focused more on the rural market than the urban

Our campaigns are lucky and have made a place for themselves across age groups. A rural imagery does not make us a rural brand just like a foreign locale cannot make it a foreign brand. It just gives a larger perspective. The focus of our communication is celebrating ideas, great ideas, and the power of changing the society for good. Case in point, our latest campaign, Walk When You Talk. It is a simple idea. We genuinely believe that it can transform the heart of the nation.

Can you tell us a bit about your latest campaign, Walk When You Talk How did the whole idea emerge And how much money did you pump in the whole exercise How long will it be on air

I would say the whole idea is courtesy our advertising agency. The idea of connecting via the mobile phone while you are walking is fantastic. When you are a large company with large growth, the advertising spends are also large. Last year, our turnover was Rs 11,000 crore. We are the fastest growing operator this year too. We have already witnessed 40% growth over last year. I would not be in a position to give any number but the need to promote our offerings and our brand is extremely important.

This is definitely not a one-month campaign. We are keen on extending it as much as we can. But a lot depends on the support we get from like-minded people to promote good health, which we believe is a concern of the entire nation. We will be quite open to extending it if we get the support.

Please give detail about Idea Cellulars digital initiatives, microsites and community networking.

We are in a peculiar market. Telecom caters to the rich, young, old, rural, urban, men and women. We are universal service provider. We also need to provide mini schemes that are focused on a certain segment in the market. The digital community in the metros and mini metros is a growing community. It is not as large as the television and newspaper medium but it definitely is a growing and important platform to reach our target consumer. We have had successful digital campaigns in the pastone of which was the Idea MTV Roadies game, which attracted millions of customers.

What are Ideas plans in terms of expansion and capacity creation

Its a challengebecause of the rate at which mobile users are growing, operators require additional spectrum creation. Its an extremely dynamic concept and geographical in nature. We have decent capacity, but efficiently utilising the spectrum is crucial. More than capacity creation it is the geographical rollout, which is important.

So what is your companys strategy for expanding user base

Telecom is one of the most competitive markets, globally. The challenge is that we have to ensure that our customers do not shift loyalties. Customers in rural India are enthusiasticthey are well aware of tariffs and plans. In other words, the consumer pull factor is a given. In this kind of a scenario, one simply has to be the best to be able to survive and grow. In terms of number of circles, there are 17 right now. Geographically, we are expanding. If all goes well during the July-September quarter, we would have 90% of the countrys footprint. Projections are that the resident circles of Jammu & Kashmir and the north east will also get covered definitely in this calendar year. Geographical expansion is strictly restricted to India right now.

How much have you invested in the infrastructure for the 3G network that you plan to bid for

It would be difficult to talk about 3G at this point of time because there will be number of ifs and buts coming in. So, just allow it to happen. As soon as we get clarity, we will be able to share details about it.

You have recently partnered with India Post to make your mobile recharge coupons available through the vast network of post offices across Kerala. Do you plan to take similar initiatives in other markets

There are different channels through which we are looking to enhance our revenue share and this is one of the initiatives taken by the channel partners. We have tied up with Indian Oil as part of that strategy.