Idea Cellular, the master of Just in Time expansion and execution analogous to the Java compilers running your Android Apps is in deep trouble when it comes to 4G LTE Mobile Data Networks.
In the last 8 years, Idea Cellular improved its revenue market share mostly banking on 2G Voice and 2.5G EDGE Data services from 9.3% to 18.1%. During the same period, market leader Airtel’s market share grew to 30.8% from 28.1%. Idea’s market share gains have come at the cost of new entrants (Aircel, Tata Teleservices and Reliance Communications) and PSUs (BSNL).
Mr. Idea Where is the 4G LTE Spectrum ?
Idea was late to acknowledge the evolution of high speed mobile broadband using the 4G LTE technology. Idea ignored the rising cost of spectrum in the 2014 auctions and even then was complacent in raising money to purchase spectrum. In November 2015, Idea attempted to correct this anomaly by acquiring spectrum from Videocon Telecom in two circles (Gujarat and UP-West). However, the company wasn’t able to fructify this deal as Airtel beat Idea’s offer, acquiring Videocon Telecom’s 4G spectrum (1800MHz band) in all six circles it was present in.
Idea does not possess 4G spectrum in circles accounting for ~48% of India’s data users, including key metro/A-circles such as Delhi, Mumbai, Gujarat and Kolkata. In comparison, Airtel and Reliance Jio have aggressively invested in spectrum acquisition ensuring that their 4G coverage footprint is pan-India.
Idea’s strategy of frugal capex in 2010 made sense then as data was at a very nascent stage. However, now, faced with a rapidly changing telecom landscape where data revenue accounts for the bulk of growth and voice revenue stagnates, Idea has missed the 4G LTE bus, in our opinion.
The 2014 Spectrum Auction saw widespread participation from incumbents as well as Reliance Jio, which was hitting roadblocks as operating on 2300MHz spectrum alone was challenging. The auctions jolted the telecom industry as incumbents ended up paying 15-100% premium over already elevated reserve prices of spectrum. This was the time when the management of Idea Cellular should have realized.
And What History Tells us about Idea Cellular Management?
Coming from behind, Idea ramped up its 2G-GSM network over the last 8 years and is now well positioned competitively (next only to market leader Airtel). Avoided investments in 1800Mhz 4G LTE Spectrum and 2300MHz band which is being used by rivals for carrier aggregation to offer higher speed advanced 4G networks.
Can Idea make a comeback this time as well in the 4G LTE Data offering ? Adopting MVNO route to Buy Bulk Data from competition or adopting Roaming Arrangements for Data may not fructify, in our opinion. So is there an Out of the Box Idea which the Management of Idea is banking upon ? Sir Ji, kindly enlighten us as well 🙂