Idea and Telecom Industry
Executive Summary
In this report, the mobile services industry has been analyzed for 3 year period from Apr’09-Dec’11 and Idea Cellular Limited has been compared with both the industry standards and the market leader, Airtel. The current and likely future trends in the industry are identified with respect to market dynamics, subscriber growth, revenue growth, policy regulation and investments. It is believed that after a period of price war over the past 3 years, a consolidation phase will follow in the near future. Moreover, while data services will dominate urban growth, voice services growth will be stimulated by the rural region with a low tele-density of around 35%.
Idea, with a revenue market share of 13.2% is the 3rd largest players in the segment. The company strengths include - an ARPU of Rs. 155 per quarter which is higher than the industry standard of Rs. 95, better MOU compared to the industry average, synergies with ABG and AXIATA and acquired 3G spectrum licenses in 11 service areas. Further, with the company 's increasing focus on value added services (e.g. Idea MyCash), experience in M&A and sound internal control systems, the company is poised for higher growth.
Airtel, with a market share of 20% has a higher ARPU than both Idea and the industry at Rs. 187 per quarter. It’s present in all 22 circles with 3G in 13 of these circles. Both the companies are looking to increase revenues from VAS and 3G in the coming future. However, Airtel with its large market presence has been able to use its economies of scale more effectively and has achieved better operational efficiency than Idea.
In order to challenge Airtel in the future, the following challenges have been identified for Idea: slower growth in its subscriber base as compared to the industry, low operational margins and ineffective use of economies of scale as its biggest challenges. Idea must address its issue of slower growth in its subscriber base by providing better tariff plans and
In this report, the mobile services industry has been analyzed for 3 year period from Apr’09-Dec’11 and Idea Cellular Limited has been compared with both the industry standards and the market leader, Airtel. The current and likely future trends in the industry are identified with respect to market dynamics, subscriber growth, revenue growth, policy regulation and investments. It is believed that after a period of price war over the past 3 years, a consolidation phase will follow in the near future. Moreover, while data services will dominate urban growth, voice services growth will be stimulated by the rural region with a low tele-density of around 35%.
Idea, with a revenue market share of 13.2% is the 3rd largest players in the segment. The company strengths include - an ARPU of Rs. 155 per quarter which is higher than the industry standard of Rs. 95, better MOU compared to the industry average, synergies with ABG and AXIATA and acquired 3G spectrum licenses in 11 service areas. Further, with the company 's increasing focus on value added services (e.g. Idea MyCash), experience in M&A and sound internal control systems, the company is poised for higher growth.
Airtel, with a market share of 20% has a higher ARPU than both Idea and the industry at Rs. 187 per quarter. It’s present in all 22 circles with 3G in 13 of these circles. Both the companies are looking to increase revenues from VAS and 3G in the coming future. However, Airtel with its large market presence has been able to use its economies of scale more effectively and has achieved better operational efficiency than Idea.
In order to challenge Airtel in the future, the following challenges have been identified for Idea: slower growth in its subscriber base as compared to the industry, low operational margins and ineffective use of economies of scale as its biggest challenges. Idea must address its issue of slower growth in its subscriber base by providing better tariff plans and
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