Late this afternoon, I decided to be present in the Idea Cellular Analyst Call, this is my first time since I wanted to know their underlying tone on 3G and nothing else. Here is an exceprt from the call and my comments if any appear in [brackets].
- Mr. Sanjeev Aga MD of Idea Cellular took most of the Questions and I must admit so far he is the best in answering the questions from technical perspective. [ I have ignored to record questions relating to their CFO]
- Mr. Aga said that Sept quarter is a subdued quarter generally and adding to their woes was Delayed Monsoon. Idea Cellular now has 40% of its Topline from Rural India.
- The Telecom Boom of 2007-08 which lifted all the boats has led to the overcapacity in the sector and hence the new trend of Multiple SIM, with the second one being primarily used for outgoing calls.
- Idea Cellular launched in Kolkata and West Bengal minutes before Mr. Aga addressed us. Idea is just short of 2 circles Assam & North East] in being a PAN India operator.
- Peak of 2G Wireless CAPEX is behind the company. CAPEX Guidance for FY 10 is INR 45 bn. Company has achieved its coverage on a measured approach.
- To a question on planned network utilization / migrating traffic on 3G spectrum due to congestion – Mr. Aga said that when possibility of 3G is available they are reviewing it. However, won’t compromise on quality as adding fresh capacity on its existing network will be in real time, just 3 days. [He must have really done some ground work]
- On pricing of calls – This equation varies from operator to operator. Mr. Aga was unaware of Idea Mumbai having launched per second billing as he said that it is left to the local team to decide. No hesitation to compete (per second offer or Simply Reliance) but don’t expect to make an announcement in an hour after this call 😉 Currently even stronger players are under pressure, but in 6 months nobody will remember this (per second billing). [So he expects the industry to consolidate within the next 6 months ?]
- Mergers & Acquisitions – M & A rules will change and everybody wants the same. Economics will cause it to change. According to Mr. Aga, the industry will reach a tipping point (where service viablity is questioned) with series of action and this is likely to happen by Summer of 2010. [Well , I personally differ from Mr. Aga’s opinion that this will happen so soon, maybe Summer of 2011 a possibility. New entrants are deep pocketed as well. Better to take a call after 3G auction]
- Spectrum Policy – Mr. Aga wants the government to come out with a clear spectrum policy, but the Government is going ahead with the auction without even telling if Defence will vacate spectrum in future or will their be more made available and feels this as a RISK which everybody is facing.
- Idea Cellular an Acquirer ? – Mr. Aga does not see any value in acquiring companies just by subscribers or brands, maybe just because of spectrum.
- 3G / WiMax Bidding by Idea Cellular– He didn’t want to raise his hand even before the auction starts :-P. Unclear Spectrum policy by Government is a major risk. Idea feels their is an appropriate price. Known application of 3G is internet.
- Uncertain Times – Idea Cellular is capable of raising INR 100 bn by virtue of its balance sheet. [Maybe it will bid for 3G, I will write a different post on this] Industry as a whole is going through uncertain times and Idea Cellular is not worried about MoM or QoQ issues and will move past the hurdle.
- Mobile Number Portability – The company is ready and is among the top 2/3 operators in implementing this system as it requires enormous back end investments [ Didn’t I tell you this in 2006 ?]