Idea’s Voice Cash Cow Under Pressure, 27 Mn Broadband Subscribers

Idea Voice Business PressurePure Play Wireless Operator, Idea Cellular’s Voice RPM expanded 2.9% QoQ as the company did not increase discounts in the first half of the quarter. Idea’s tactics seem to have backfired as VLR subscribers declined and minutes fell 1.1%. Thus Idea’s sequential voice revenue growth at 1.8% trailed Airtel’s 2.9% the major cash cow for the Wireless Business in India.

Wireless Broadband Performance
Idea’s data revenues grew 4.3% qoq, continuing the momentum slowdown seen in recent quarters. Data volume growth was a healthy 13% qoq. Data ARMB, however, fell a sharp 8% qoq to 21.1 paise/MB. Mobile Data subs additions was at 5 mn qoq with even the 2G subs base growing by 1.5 mn qoq. 3G/4G subs base stood at 27 mn (+3.4 mn qoq) with 1.8 mn of these being 4G subscribers (0.68 mn at end of Mar-2016). 3G/4G volumes were just above 70% of the total data volumes on the network. 35% of subscriber base has 3G devices (half of them are on 3G plans) and 8% 4G. But difficulty in widening subscriber base has forced Idea to cut prices of small data packs. Average 3G/4G data usage was 889 MB/month with only 4G subscribers usage higher at 1.3 GB/month.

Idea Cellular added ~6500 3G+4G sites in 1Q FY2017 out of which ~5300 were 4G sites. 7650 sites are connected by fibre which works out to 11% of 3G+4G BTS count and the company targets to increase to 25%. The average daily throughput per 3G+4G BTS was 11.4GB which suggests that the current capacity can support ~3x more traffic.

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