The management of Idea Cellular in the past had dismissed any threats from 4G-LTE Mobile Data Services. However, in the latest Call, the management took a sharp “U” turn and said Idea is and was an ROI focused company and based on its observations in the past few months it saw a business case in advancing LTE rollouts. It cited the rapid uptake of 4G devices, convergence between prices of 3G and 4G equipment and increasing willingness of consumers as key drivers for advancing LTE rollout. The company said 3G sites would largely be co-located for the next few years and did not see the need for more than 1-2% standalone 3G sites. 4G sites would be100% co-located for a few years.
Idea 3G Data
The management indicated that data volume growth trajectory was broadly intact and marginal slowdown in upward data revenue growth was due to lower data realizations. This was majorly driven by the increase in service charge to 14% (as the company found it difficult to pass these through), lowering breakage, and increased uptake of promotional packs.
Idea saw strong minutes addition (10.7bn qoq, up 6% qoq and 18.5% yoy) accompanied by 3% qoq and 11% yoy decline in voice RPM to 32.9 paisa. The management indicated that on an adjusted basis voice realization remained flat qoq — this is a reversal of the downward trend over the last three quarters. Going forward, realizations are likely to remain flattish.
Whatsapp & OTT Cannibalization
The company said that it was witnessing SMS cannibalization due to OTT applications. However, voice cannibalization is insignificant and is expected to remain at the same level. The management indicated that only about 0.1-0.2% of the total voice traffic were carried on VoIP. It also pointed out that even in developed markets (offering limited bundled services), only about 1.5-2.5% of traffic was on VoIP
Linking BTS with Optical Fiber
The company said that it was deploying 2G BTS which are capable of running two or more technologies at minimal incremental cost. On the fiber side, it is increasing investments by increasing the number of fiber hops from 1 hop for 8 sites to 1 for 4 sites. It indicated that while about 13-14% of the total sites are fiberized, in the next two years almost all 3G/4G sites would be fiberized. It also mentioned that the current capacity utilization of data sites was in the range of 50-60%.