Commentary from Idea Management
Contrary to market expectations that RJio may disrupt, we believe Idea will benefit as RJio entry is likely to drive mass market adoption with affordable handsets and lower data pricing. We think that Idea is fairly well positioned for data with 3G+4G spectrum bank covering 87% of revenue base.
Yes. The mobile data business drives operating leverage as the incremental operating costs are substantially lower. While RJio is likely to put pressure on data tariffs, the higher volumes as a result of high elasticity should enable EBITDA margins to trend up.
We believe Idea may not participate in 700MHz spectrum auctions because 1) the pricing is extremely high in our view, 2) the supporting ecosystem is at nascent stage, 3) Idea has adequate spectrum holding to take advantage of data adoption.
6/10 customers indicated a lack of interest in RJio, while more than 95% subscribers appeared satisfied with their existing service providers, with subscribers of non-top three telcos more inclined to try RJio. We believe this indicates better customer stickiness for the incumbents.
