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Idea Reducing Promotional Offers, Positive on 3G, 4G LTE Only On Right Spectrum

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Idea Cellular 3G Big GrowthIdea Cellular, third Largest Wireless Service Provider in India on the basis of Revenue Market share has some interesting insights to share. The company has a gap between current (34 paise) and headline (43 paise) voice RPM will continue to narrow as promotional offers keep declining at a faster clip with reducing competition.

Idea currently loses Rs 135 mn per day on promotional offers (due to 9 paise lower RPM compared to headline tariff). As promotional offers are being gradually withdrawn (from August 2012), the share of dual SIMs in the industry has been declining (1.15x vs. 1.3x a year ago). Also, with declining competitive intensity, minutes will migrate from marginal players to old operators as price arbitrage reduces.

Idea Cellular Optimistic on 3G
EVDO for the Large Screen [Laptop / NetBooks] and 3G for the Small Screen [SmartPhones] seems to how the industry is falling in place. Idea Mgmt believs that the addressable market opportunity for data revenue is 450-500 mn subscribers, the current 3G penetration is less than 10%. Declining handset prices (at inflexion point of USD 45-50) will ensure rapid growth in data usage. However, I am a bit skeptical about Idea’s optimism amidst the DoT’s sudden activism against 3G operators Roaming Arrangements.

Idea Cellular 4G LTE Plans
Global 4G LTE Subscriber base is currently less than 100 Mn. Idea’s 4G entry is dependent on availability of the right spectrum band. Management believes the best band for 4G is 1800 MHz followed by 700 MHz. LTE in 2300 Mhz is currently not used for GSM technology and is an inefficient band – both from point of view of coverage and capacity (also has challenges on numbering).

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