Telecommunications & Technology
Idea’s CEO suggests that voice tariffs are still rising and likely to stay firm over the next 3-6 months. In contrast with initial concerns, Idea appears comfortable with market share trends indicated by TRAI’s latest revenue data for the industry. Traffic growth is slower than before and competition from smaller operators has intensified in certain circles but these are unlikely to disrupt Idea’s marketing strategies.
Idea does not foresee any risk of new
Despite best efforts from the Government to regulate the Telecommunication industry with prudent billing norms, Operators like Airtel, Reliance, Idea Cellular have resorted to malpractices with their very own customers such as unauthorized mobile balance deductions by activating Value Added Services the customer has not subscribed to. The TRAI and the DoT established Internet / Web Based Complaint Cells but didn’t take off due to poor reach of broadband & the internet.
A High level committee looking into this problem just a while ago has told us that they have circulated a notification to all
In-line with the rest of the industry (include new entrants) Vodafone started fine tuning their pre-paid mobile plans by increasing tariffs / reducing the number of days / reduce talk-time benefits etc so that the the net realizations per minute goes up. This can be easily done by their Anayltics team looking at the tarffic patterns and the plans subscribed. Our statistics team tracking Telecom Tariffs in India has released the data on Vodafone Tariff hikes in August / September 2013. The following chart shows the hikes represented by circle name, old tariff followed by new tariff, the change and the impact
Idea Cellular along with the rest of the Industry hiked 2G Mobile Voice Call Tariffs in August & September considered to be a seasonally weak quarter in the Indian Wireless industry. Our Statistics Team tracking the telecom circle-wise mobile tariffs has released the following pre-paid plans which saw an increment in net revenue realization to the company – the RPM factor.
Idea Cellular Mobile 2G Voice Tariff Hikes in August / September represented by circle name, old tariff followed by new tariff, the change and the impact
Idea’s 3G network usage at 122 GB per BTS per month [Includes Total Traffic of Intra-Circle Arrangements as well] in 1Q is less than 10% currently; each 3G BTS deployed in heavy traffic area can be potentially upgraded to exceed capacity throughput of 3,000 GB per month. To drive greater 3G penetration, customer education (about benefits of mobile data, apps) and cheaper smartphones are more important that lower data pricing per se, according to Idea CEO Himanshu Kapania.
He further said that 3G data business may be unviable at current pricing
Vodafone recently offered some terms and conditions to govt. for renewal of its licence/spectrum in three circles that expire in 2014. Prices offered are at a ~75% discount to last (failed) auction prices, along with a reduction in annual spectrum fee. Importantly, Vodafone believes 900MHz should be 1.3x. 1800Mhz. Vodafone’s offer for the 20-year renewal is as follows
Idea Cellular continues to heavily invest in 3G – currently spending ~1/3rd of capex on 3G (network equipment + backhaul). It Expect mass market adoption of data (500m + data subs users) over next 3-5 yrs, with the mkt size expanding to Rs500-700bn.
Idea continues to gain both VLR (reflects active subs) sub share (+0.6% qoq in 4Q13 qtr) and rev mkt share (+0.9%qoq). Moreover,
its incremental share for both these metrics is 40-50%. Driven by (a) Increase in mobile penetration – Physical penetration is still only ~ 50%; (b) Increase in MoU per sub in part helped by lower incidence of multi-SIMs and (c) Improvement in voice
Idea Cellular the plain vanilla wireless operator in India continued to withdraw benefits in bits & pieces provided to its 90% of its pre-paid subscribers by means of Special Tariff Vouchers / STV or STD Packs, etc. This is in-line with Airtel and Vodafone as these operators have come under pressure from the Corrupt Government and DoT increasing il-legal levies and charges on spectrum not permissible under the law.
The STV / Recharge Vouchers and Packs Modified in may 2013 are as follows,
Vodafone India in-line with Airtel has reduced benefits on most of the Special recharge / tariff Vouchers and Pre-Paid Packs across all the 22 Circles in India. Even a Small Modification in STV / Recharge Pack adds considerably to the bottomline of the company in that circle. We’d like to present you data on the Vodafone Pre-Paid Mobile STV / Recharge Pack Modifications that happened in May-2013 as shown in the table below
Idea’s superior execution can be seen both in its sustained revenue share gains as well as better cost control vs. peers. Idea has gained revenue share in all its top 5 revenue generating circles in the last 3 years. Vodafone has gained in 4; Airtel has lost in all 5 of its biggest circles. The top 5 circles for each operator contribute 50-60% to their topline.
Idea Cellular has shown sustained margin improvement vs. flat to declining trends by RCOM and Bharti. The sustained improvement on better cost control is especially commendable as it straddles its 2 roles – incumbent in 11 circles and new entrant in the remaining.