Idea Cellular reiterated the stance that 4G networks will be launched only in 2016, and the market is not yet ready for 4G uptake. On the earnings call, management explained that it prefers to wait until competition and customers move on 4G before making their own investments. In a media interview, management also commented that Idea could move on 4G only after smartphone prices become affordable (Rs5,000 price points).
We worry that this focus on short-term returns by delaying 4G investments could impact longer-term market share prospects for the
company. We note that 4G smartphone prices have already fallen below Rs7,000 (including some dual-SIM phone models), and at least
one existing operator (Bharti) appears to have picked up 4G investments significantly in recent quarters?in addition to the upcoming 4G launch by Reliance Jio Infocomm.
Separately, management explained that investments into 3G network would be calibrated as well (3G footprint could go up from 30-40% of 2G footprint to 60-70% over 2-3 years). Idea's 3G network utilisation has gone up to ~50% now vs ~30% just two quarters ago.
