We Aim to Be the Operator of Choice

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We aim to be the operator of choice - Views of Rajat Mukarji, Chief Corporate Affairs Officer, Idea CellularCompany Stories, July 15, 2010

What is the biggest challenge faced by Idea Cellular today?

One of our biggest challenges came in 2006 when the Idea shareholding changed; the Tatas

stepped out and the Aditya Birla Group took over the majority shareholding. Effectively, the

company started to come into its own only in the latter half of 2006. Prior to that, as a result of

multiple shareholders, the company's growth was always a little bit constrained from the

regulatory standpoint.

Thus, single ownership brought in greater focus. At that point, we had only 11 circles in

operation, of which eight were dominant circles while three were new. So, the first order of

b i i 2006 t l f li d hi I di f t i t


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(ILD) operations and now, we even have an internet service provider (ISP) licence. So, in every

respect, we are a completely integrated telecom player.

After the Aditya Birla Group took over, each year there were a series of activities that were

milestones in their own right. And yet, they were preparing us for greater challenges. Some of

these milestones were the IPO and outsourcing to IBM in 2007; new licences in 2008;

pan-Indian coverage in 2009; and 3G spectrum in 2010.

On the whole, the main challenges being faced by the industry include increasing competition

with up to 15 players in the market, falling tariffs and lack of clarity in policy matters.

The Indian telecom sector has witnessed fierce price competition. Lower tariffs, coupled with

higher channel payout by new competition, and increased incidence of multiple SIM ownership

have led to record subscriber additions.

In such a scenario, improving capacity utilisation and operational efficiencies; leveraging of

spectrum and scale advantage in incumbent service areas; a calibrated approach for new

areas; sophisticated processes; brand power; and ensuring a strong balance sheet will enable

Idea to emerge competitively stronger during and after the current difficult phase of market

overcapacity and hyper competition. The company has recorded the highest revenue growth

among the listed telecom operators in India.

When is Idea likely to cross the 100million subscriber mark?

As of end-May 2010, we had 67 million subscribers on our network and have been adding

nearly 2 million month-on-month. However, subscriber numbers have never been too important

for us. We have, however, always tracked our revenues very closely. Even when we calculate

market share we do it in terms of revenue market share not subscriber numbers Subscriber


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what has been its strategy so far?

In 2009, the company became a panIndian integrated GSM operator, with a presence in all 22service areas in the country. We commenced operations in the telecom service areas of Orissa,

Kolkata and West Bengal, Tamil Nadu including Chennai, Jammu & Kashmir,and Assam and

the Northeast during financial year 2009-10.

All these rollouts were carried out quite successfully. We got an especially warm response inthe east, where business is stable today.

The company is now the third largest operator in India in terms of revenue. We have

consistently grown our revenue market share despite increasing competition.

In a year characterised by the entry of new operators, it is expected that the incumbent would

cede market share.However, during calendar year 2009, Idea increased its overall revenue

market share from 11.4 per cent to 12.7 per cent. Even in our 11 established service areas, the

share increased from 17.5 per cent to 18.8 per cent.

What is the company's rural expansion strategy?

Idea Cellular's rural strategy was developed in 2006-07. Our aim has always been to scale up to

accommodate future growth, and a sound rural marketing and sales strategy is one of the most

critical drivers to achieve this. This is further highlighted by the fact that most of the expansion is

currently coming from the non-urban areas.

In fact, towards the second half of last year, two out of every three Idea users were from

non-urban environments. This provides an indication of how large our rural penetration has

been. If our penetration has been positive, it has been due to the fact that we have been able to

develop and support innovative rural marketing plans


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What are Idea's key thrust areas?

Managing growth in the competitive environment is very important. Areas such as scaling up;supporting 3G; developing innovative products and services; ensuring effective customer

service delivery; and building a strong customer service brand are very important for the

company.

The telecom industry is not one where a specific criterion is important; rather the players haveto fight the battle on multiple fronts. We have to keep growing. If you miss that growth curve,

you fall behind and miss numerous opportunities. One has to keep up.

What are the company's investment plans for the next one year? How much has been

invested so far?

Idea Cellular's total capex (network and non-network) for financial year 2010-11 is

approximately Rs 30 billion. This does not include any payouts on account of the 3G auctionand 3G capex. We have already made a payment of Rs 57.68 billion to the government for

winning the 3G bid in 11 service areas.

So far, the company has invested Rs 200 billion.

What is the road ahead for the company?

We have identified several key areas for future growth. We will continue to build on the growth

momentum to increase our market share. In addition, we will focus on VAS; prepare for 3G,

which is in the offing; and increase our NLD and ILD services. We aim to be the operator of

choice for every new subscriber.

Idea Cellular has won 3G spectrum in 11 service areas, namely, Maharashtra, Gujarat, Andhra

Pradesh, Kerala, Punjab, Haryana, Uttar Pradesh (East), Uttar Pradesh (West), Madhya

Pradesh, Himachal Pradesh, and Jammu & Kashmir, at a total cost of Rs 57.68 billion.


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We Aim to Be the Operator of Choice

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