Idea Cellular Management in an Investors call said that revenue growth for Idea will remain strong over the next 12 – 18 months despite regulatory concerns. Pricing power has returned to to incumbents with increase in minutes market share and increased contribution from non-voice revenues.
Idea’s Analytics team probably expects some decline in Minutes of Usage [MoU] however, this does not essentially translate into decline in Revenues. Data suggests that as the tariff war came to an end in 2011, the industry’s revenue growth increased from 8-10% to 16%. It is inevitable that tariffs will inch up for business models to sustain as costs could not come down further. This is not a cohesive action, but a necessity for survival.
Idea also spoke about the position of incumbent operators [ Airtel & Vodafone] collectively they control over 66% of Revenue Market Share and just 48% of Wireless Minutes. Idea expects the Minutes Market share also to rise with new operators selectively reducing their footprint. New Entrants are unlikely to shut down business immediately and exit as everyone has backing of a strong parent or deep pockets.
Management believes that their is tremendous potential for data Services but 3G growth will not be immediate. After heavy 3G spectrum payouts and phased rollout, Idea expects investment in 3G rollout new technologies and related infrastructure for data like backbone, fiber etc. will pickup which can dent its margins.