India not ready for 4G LTE , Voice Market Very Lucrative – Idea CEO, Himanshu Kapania

Idea Cellular CEO, Himanshu Kapania hosted Analyst Call to discuss FY 2013-14 results. One of the Grey areas of this call is Himanshu does lot of repetitive work by talking on what is already sent out & uploaded on Idea website.

Responding to a question on if they see launch of Reliance Jio Infocomm as a threat, Himanshu said that he will not comment on particular competitor and added India is not ready for 4G LTE mass market and operators may find some selective Hotspots. He made it very clear that Idea Cellular will not invest in building 4G Networks in the next 12 months except for testing technological feasibility. He also said that chunks of 1800Mhz suitable for 4G LTE will be selectively used for enhancing 2G capacity wherever needed but no 4G rollout in the immediate offing. Idea 4G LTE rollout will be based on the demand for services and not on what other companies spend.

2G Voice Very Lucrative
According to Idea Cellular, Voice Margins are very Lucrative and Far, Far ahead of Mobile Data Services and is the biggest margin business in Indian Telecom. They are bullish on Voice as they penetrate more number of smaller towns and villages. On RPM decline and stability of MoU, he said that Telecom consumption will pick-up with Economic revival which will thus take care of KPIs. He also said that Indian Telecom is akin to running business in several countries based on the Circles classification done here and each Circle has its own Business Plan and Strategy. Why Headline Tariffs have not increased despite input cost of Spectrum going up significantly ? Idea believes in balancing headline tariffs and reducing promotional minutes.

2G & 3G Mobile Data Services
From the call we can easily infer that Idea Cellular’s Network Operations continuously scans for its customers compatibility of handsets for various Network Services. Some customers of Idea who do not use Video are satisfied with 128 Kbps EDGE network to get their work done. In FY2014-15, Idea will invest in expanding its 3G data network. He said only 12.9% of Ideas’ customers handsets are 3G complaint despite the price of 3G dropping from Rs 10,000 to Rs 4,500 in the last 12 months. Currently Idea covers 25% to 30% of population with 3G Data and they attempt to raise to 50% to 60% depending on Device availability and consumers spending power.

CAPEX – On Intra / Inter City OFC Networking. Relative to 2G, 3G will be per-dominant spend this FY as they will launch 3G data services in Delhi and Punjab shortly. New business group is created to look after Telecom Tower business and tenancy is expected to go up in the next 6 months. Idea unwilling to share tower infrastructure at discount to market rate.

What I love about Idea Cellular is the Just in Time rollout and Strong Execution preserving bottomline which none of the companies in Indian Telecom have been able to do so far. Credit must go to former CEO Aga and present CEO Himanshu Kapania for this unmatched execution in Idea Cellular.