Idea Cellular’s spectrum needs are more discretionary now unlike in 2014/15 and hence feels no pressure to invest in 2016 auctions; 700Mhz is not economically feasible at proposed price. Given large supply of spectrum across bands, Videocon deal didn’t make economic sense and market is overly concerned with potential impact of Reliance Jio, and is ignoring more important trends like industry consolidation, spectrum trading / sharing and oversupply.
On data, management commented as under,
1. Smartphone penetration is low but growing strongly (~32% of Idea’s customer base vs. ~19% last year); 4G forms ~10% of total smartphones.
2. 4G adoption will be faster than 3G as device upgrade is easier.
3. Indian data market capacity to grow to 60PB from 3PB presently.
4. Idea has 4G coverage in 500 towns and will exceed its target to reach 750 towns by June 2016 and will focus on
~300-400m users to add another leg to its data revenue growth.
Whilst data remains the fastest growth driver, Idea identifies voice as key driver to grow its RMS in medium term – Voice forms ~85% of ~US$30bn Indian mobile market, Idea is gaining market share in voice thanks to its wide 2G coverage; Idea added ~100b minutes this year which is more than Airtel and Vodafone combined.