Telecom Industry

Analysis & Study on

Idea Cellular Limited
Submitted to: Prof.
Srinivasan R

Group-5, Section F
Sandip Datta 1511430
K.E.K.Sashank 1511393
Sanket Kale1511398
Sangbarta Chakraborty 1511431
Pooja Gupta 1511444

Industry
Analysis

Industry Overview
Wireless Subscribers (in mlns)
47.2 22.8
61.7

231.7

Low Rural
Penetration
(48%,418 mn)
Overall
(69.9%, 818 mn)

83.4

77.8

185.4
110.4

Wireless Internet
Penetration
28.9% of total
mobile
subscribers

91% spectrum by
value bought by 4
players
Trend towards
consolidation

Idea
162.8
Airtel Vodafone

Idea Cellular Reliance BSNL

Aircel Tata Teleservices Telewings

Others

In FY 15, 65%
of new
subscribers
from rural
areas

Strong Mobile Data

Penetration
(92.8% yoy growth
for Idea 15-16)

Source: Idea Cellular Investor presentation

Attractiveness of telecom
:
LOW
of New Entrants:
Threat
High Capital
industry
Low
Requirement

Supplier Bargaining
Most tower companies
Power: Low
owned by telecom
providers
Inability to Forward
Integrate
Low product
differentiation

(Infrastructure and
spectrum)
Low Product
Differentiation
High government and
Legal
barriers
Industry
Rivalry:
High
Fragmented
Industry
with few major players
High exit barriers
Marginal Cost
Conditions
Basis of Competition:
Price
Threat of Substitutes:
High

Cheap Routers and WiFi

Internet calls and SMS
substitutes
4

Low Switching Cost due

Buyer Bargaining Power:
to MobileHigh
Number
Portability
Readily Available
Information
High price sensitivity
due to low
differentiation
of
Power
of Complements:
product High
Value Added
Services,
Exclusive Payment
Gateways, Smartphones,
Mobile Banking, Call
Centers etc.

Critical Success Factors

Economies of Scale
Spectrum and
License
Strategic
partnerships
Price
Customer satisfaction
Expansion and
penetration
5

Large subscriber base to recover huge fixed costs involved in

infrastructure, land etc.
Necessary to offer a range of services across various locations
Outsource non core activities like ITES, infrastructure
Shared licenses to operate in various circles
Highly price sensitive customer
MNP option, very low switching cost for consumer
Good network coverage, better call quality, customer service

Reach to large number of regions and customers

Firm Analysis

Idea Cellular: Overview

1 Revenue Market Share based on TRAI Q1FY16 revenue for UAS and Mobile licenses only.
2 VLR subs as of June 30, 2015 (Source: TRAI)
3 Single Country Operations, data from GSMA Intelligence as of March 2015. 4 As of June 30, 2015
7

Source: Idea Cellular Investor presentation

Business Model
Passive Infrastructure
Sharing towers with rivals reduced cost
16% stake in Indus Towers; 9,500 (approx.) towers owned, particularly in the rural areas

Customer Support
Firstsource provides services - Customer Service, Billing, New Product Information and Plan
details related interaction services to IDEA

IT Services
IBM to manage Ideas IT infrastructure and applications till 2020

Network
Ericsson, Huawei and Nokia Siemens Networks (NSN) for data network maintenance

Company Financials

10

Source: Idea Cellular Investor presentation

Resource analysis
ABG Advantage
Owned Towers in rural
India

Culture, Favorable debt financing deals, interest rates,

shared leadership ideas
~371,0001 Towns & Villages on GSM

Brand

Theme based advertising, Positioning as smartness in using

idea, Celebrity ambassadors: No idea Get Idea, Idea 3G Pe
BG, What an Idea Sirjee, No Ullu Banaoing, Idea Internet
Network

Distribution/Service

50,0002 distributors, 15,0002 contact center service agents,

'My Idea' stores, data analytics

Spectrum/Network
Employee
Empowerment
11

2G : 8 states, 3G : 11 states, 4G plan by H116

Decentralized management approach, BTS profitability, Sons
of the soil

1.Idea Cellular Investor presentation Q1 FY 16

2. http://forbesindia.com/article/boardroom/why-idea-cellular-chose-bharat-over-

Sustainability advantage analysis

Valuable

Rare

In-imitable

NonSubstitutable

ABG
advantage
Owned Towers
Rural India

Marketing
Innovation/Br
and
Distribution
and Service
Delivery
Spectrum/Net
work
Employee
Empowerment
12

*
* Imitable in long

Strategy focus shift

In 20091

Low
cost

Rural Teledensity 15.11%

Idea market share 10%

Idea focussed on rural

penetration
In 2009, urban teldensity
reached 100%
Airtel and Vodafone entered
rural markets
Idea broadened focus to include
data driven urban markets
13

Idea
Cellular

Focus broadened
to include urban
areas
Vodafon
e
Airtel

Broad
focus

Narrow
focus

Differentiat
or

1. http://www.trai.gov.in/WriteReadData/WhatsNew/Documents/PR-34-TSD-Mar-1205

Strategies
Late entrant, focused on consumer experience, reached
people through plans, pricing and network

Positioning
Outsourcing
Focus on Last Mile
delivery
Customer acquisition

Similar model as Airtel, major focus on operational

expenditure and not capex, outsourced all non-core activities
to leading companies
Focus on Sales and Operations, strength in rural and semi
urban areas, KPI- Revenue per BTS, Sons of Soil approach
Wins the MNP game, flank approach, huge capex in rural
network, largest sales program in rural, leadership in specific
areas

Data consumption
push- VAS

Promoting hassle free Data sharing through Easy Share,

launched Freedom packs (30-40% lower prices), Launched
Idea Money

Defensive 4G
strategy

Plans to avoid head on competition with Airtel, focus on

leadership in its dominant circles, plans to increase capex in
FY 16 by INR 65001 crores

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2. http://www.moneycontrol.com/news/business/to-launch-4gjan-2016-revise-capex-to-rs-65k-cr-

Recommendations
4G strategy
Utilizing growing
Mobile Money
market
Diversification into
branded digital
services
Diversification into
new businesses
Increase in scale

Continue to follow a Defensive strategy, enforce customer acquisition before entrance of

Reliance Jio, increase switching costs
Finalize the launch of low cost branded 4G smartphones because of huge scope for LTE
phone penetration
Market growing at a CAGR 44.6%, Expected to grow from $12.3 billion(2014) to $78 billion
(2019)
Transition from Idea Money to Idea Payments Bank can create ample revenue generation
opportunities
Mobile penetration in India 73%; Internet penetration 19%*; only 25% of Idea subscribers
use 3G
Meaningful data penetration possible only by bundling with right content and applications
(OTT applications)
Focus on branded digital services apps with focus on regional content through investments
or partnerships
Revive Idea Netsetter business & increase internet penetration in rural areas where wired
connectivity is low
Venture into related services like DTH, Broadband, Fixed Line that are possible with current
resources
Increase in capex to develop 4G infrastructure in 10 circles. Investment in IT infrastructure to
improve service
Foster Inter-circle roaming pacts to have better reach in circles where Idea lacks its own
spectrum

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*http://www.livemint.com/Industry/VThUq5I4BivpTDZdQb5sNN/Mobile-Internet-users-in-India-to-double-by-

Thank You

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