Idea – 2G Tariff Stable, 3G Expansion, 4G-LTE Not in Medium Term

Idea Cellular 4G LTE StrategyIdea’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 competition over the next 6-12 months. Growth in data volumes is being driven by faster adoption of 2.5G/EDGE services so device affordability and device replacement cycle are key entry barriers for new competition.

Idea on 3G and 4G
Idea’s priority is to renew licences (starting Dec-2015) and cover gaps in its 3G footprint. Although LTE services on 1800MHz are technically feasible, the eco-system for LTE seems unlikely to scale up in the medium term.

Further, in-principle approval for spectrum trading should encourage more efficient capital allocation by operators instead of immediate participation in spectrum auctions. Idea does not foresee any material acceleration in capex intensity from its current level at ~13% of sales unless there is fresh set of events (for e.g new 3G licences).

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