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Key Takeaways
Core essence: Significant opportunity available in the Indian voice as well as data
markets over the medium term. Current focus only on tariff hikes, tower deals, etc
could be misplaced.
Industry insights
Penetration of voice services in India is still relatively low at ~50% v/s the 80-90%
benchmark.
Virtual consolidation in the industry is evident from increase in revenue market
share of top-three operators from ~55% to ~65% in the last 3-4 years despite
hyper-competition.
Wireless is a heterogeneous sector, with different operators having leadership in
different circles.
The share of non-voice services in revenue is set to increase, as most subscribers
will upgrade their handsets over the next few years and eco-system for 3G is being
developed.
While incremental operating cost for 3G is only a fraction of the current operating
costs, amortization and finance costs related to 3G spectrum will negatively impact
the bottomline of all operators.
Company vision and strategy
Idea has a strategy of over-investing in its established circles, which drives its
leadership in these operations.
Idea is focused on deepening its coverage and driving rural growth. 67% of net
subscriber additions for Idea come from rural markets.
Focus is on building scale, with 1.2b minutes/day. Idea is the eighth-largest operator
globally in terms of traffic.
Enhancing revenue market share, driven by (1) focus on quality of subscribers, (2)
cash profits to sustain investments, and (3) higher-than-industry traffic growth.
Idea is expanding its 3G reach and is rolling-out 3G services in 10 towns/day, as
significant growth is expected from wireless broadband on the handsets.
Key triggers/milestones/challenges
NTP 2011 would be a key event to watch for.
Continued overcapacity in the industry remains a challenge.
Potential exit of unviable operators could be an important milestone for the industry.
Increase in smart-phone penetration to drive data revenue.
Mr Himanshu Kapania is
Managing Director of Idea Cellular.
Before he took up this office on 1
April 2011, he was Deputy Managing
Director.
He joined Idea in September 2006,
with over 21 years' industry
experience. He has served the
company as Chief Operating Officer,
Corporate and Director of
Operations.
Mr Kapania has worked with Reliance
Infocomm as Chief Executive Officer
for Northern Operations, with
Network Limited as Deputy General
Manager - Marketing, with Shriram
Honda as Manager - Marketing, and
with DCM Toyota.
He is a BE (Electrical & Electronics)
from Birla Institute of Technology,
Ranchi and a postgraduate from the
Indian Institute of Management,
Bangalore.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Core essence: Significant opportunity available in the Indian voice as well as data
markets over the medium term. Current focus only on tariff hikes, tower deals, etc
could be misplaced.
Industry insights
Penetration of voice services in India is still relatively low at ~50% v/s the 80-90%
benchmark.
Virtual consolidation in the industry is evident from increase in revenue market
share of top-three operators from ~55% to ~65% in the last 3-4 years despite
hyper-competition.
Wireless is a heterogeneous sector, with different operators having leadership in
different circles.
The share of non-voice services in revenue is set to increase, as most subscribers
will upgrade their handsets over the next few years and eco-system for 3G is being
developed.
While incremental operating cost for 3G is only a fraction of the current operating
costs, amortization and finance costs related to 3G spectrum will negatively impact
the bottomline of all operators.
Company vision and strategy
Idea has a strategy of over-investing in its established circles, which drives its
leadership in these operations.
Idea is focused on deepening its coverage and driving rural growth. 67% of net
subscriber additions for Idea come from rural markets.
Focus is on building scale, with 1.2b minutes/day. Idea is the eighth-largest operator
globally in terms of traffic.
Enhancing revenue market share, driven by (1) focus on quality of subscribers, (2)
cash profits to sustain investments, and (3) higher-than-industry traffic growth.
Idea is expanding its 3G reach and is rolling-out 3G services in 10 towns/day, as
significant growth is expected from wireless broadband on the handsets.
Key triggers/milestones/challenges
NTP 2011 would be a key event to watch for.
Continued overcapacity in the industry remains a challenge.
Potential exit of unviable operators could be an important milestone for the industry.
Increase in smart-phone penetration to drive data revenue.
Mr Himanshu Kapania is
Managing Director of Idea Cellular.
Before he took up this office on 1
April 2011, he was Deputy Managing
Director.
He joined Idea in September 2006,
with over 21 years' industry
experience. He has served the
company as Chief Operating Officer,
Corporate and Director of
Operations.
Mr Kapania has worked with Reliance
Infocomm as Chief Executive Officer
for Northern Operations, with
Network Limited as Deputy General
Manager - Marketing, with Shriram
Honda as Manager - Marketing, and
with DCM Toyota.
He is a BE (Electrical & Electronics)
from Birla Institute of Technology,
Ranchi and a postgraduate from the
Indian Institute of Management,
Bangalore.
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