Idea Cellular continued to chart significant growth on the operational and financial fronts during 2014. Data emerged as a strong focus area and the operator took several initiatives to expand its data footprint. The company is optimistic about maintaining its growth momentum in 2015 as well. Himanshu Kapania, managing director, Idea Cellular, talks about the company’s performance in 2014 and its growth strategy for this year. Excerpts…

How was the company’s performance in the past year? What were the high points?

Idea Cellular, which is among the top three mobile operators in India, continued to build on its growth momentum to achieve a 1.4 per cent growth in revenue market share (RMS) and 1.2 per cent in customer market share (based on the visitor location register [VLR]) on a year-on-year basis. As per the Telecom Regulatory Authority of India’s latest gross revenue release for the July-September 2014 quarter, Idea recorded the highest RMS growth of 1.4 per cent between the second quarter of 2013-14 and its corresponding quarter in 2014-15 to reach a national RMS of 17.2 per cent. The incremental RMS for the second quarter of financial year 2014-15 over that of 2013-14 stood at 30.3 per cent, indicating that Idea’s seven-year growth momentum will continue.

Idea closed calendar year 2014 with a milestone achievement of over 150 million quality subscribers on the VLR, catapulting itself to the position of the sixth largest mobile operator in the world, as per the GSMA Intelligence Report. Further, Idea stayed ahead of the curve throughout the year, which is reflected in its 18.1 per cent year-on-year revenue growth. It, moreover, registered a 14.3 per cent growth in minutes of usage in 2014 as compared to 11.9 per cent in 2013. The company also added 22.2 million subscribers (VLR net additions), the highest addition in the industry, during 2014. In line with the growing demand for mobile internet, Idea’s mobile data volume more than doubled with a 128.8 per cent year-on-year growth.

During the year, Idea conducted a countrywide expansion drive for its service centre network. It launched a range of services and retail stores in different formats such as “My Idea”, “Idea Point” and “Idea Service Points”, to cater to the evolving needs and demands of mobile consumers. In addition, it expanded its 3G network in 11 circles to include Punjab. The company is gearing up to launch 3G on 900 MHz in Delhi in the first half of 2015.

Idea has maintained its leadership position for over three and a half years in terms of mobile number portability (MNP) net additions. As of December 31, 2014, it had a net MNP gain of nearly 12 million customers.

In order to cater to the ever-growing subscriber base and prepare for the next phase of growth based on mobile data services, Idea increased its network capacity substantially in the past year. It integrated 8,331 additional 2G sites, expanding its footprint to 109,931 GSM base transceiver stations covering 7,422 census towns and 3,54,000 rural villages. During the same period, the company expanded its 3G footprint with an incremental investment of 7,840 3G sites, taking the overall 3G Node B count to 27,744. Further, Idea is investing in optic fibre cable (OFC) transmission networks to tap the future potential of wireless broadband and cater to the needs of the growing customer base. The company’s OFC network has expanded to over 90,000 km, a growth of over 10,000 km in 2014.

What steps are being taken to encourage data service adoption?

Idea enhanced its mobile data services portfolio through a slew of initiatives in the past year. These include investment in spectrum and network expansion, and the launch of innovative data products and devices such as affordable 3G smartphones and high speed Wi-Fi dongles.

Idea also launched a brand campaign, “No ullu banaoing”, to spread awareness about mobile internet, which gained huge popularity amongst all segments of users. It has followed it up with the recent “IIN – Idea Internet Network” campaign.

In India, device price is critical for the uptake of mobile data services. Idea’s effort has been to bridge the price barrier in upgrading 2G users to 3G, for which the company has launched its own branded 3G smartphones.

Data revenue currently constitutes 15.7 per cent of Idea’s service revenue, compared to less than 10 per cent a year ago. The company’s data subscribers grew to over 34 million, resulting in a data volume consumption of 46,077 million MB in the third quarter of 2014-15. This translates into an average usage of 470 MB per data user, which was around 300 MB a year ago. However, with only 22 per cent of its customer base using data services, there is sufficient head room for subscriber growth in data services.

From an operator’s perspective, how do you see the rural segment evolving in India? What are your plans to drive further growth in these areas?

In rural India, the mobile device is increasingly becoming the first screen for consumers and is the only device to connect them to the world of the internet. The mobile platform has been identified as the means to reach out to rural consumers for a range of essential services such as banking and finance, health, education and governance. With the government’s increased focus on the Digital India programme, we expect a lot of emphasis to be laid on developing these services through a favourable policy and regulatory framework.

Idea has been the frontrunner in establishing a robust network and distribution channel to drive mobile penetration in rural India. With two out of three new Idea subscribers coming from rural and semi-urban areas, Idea has consistently focused on enhancing the service experience for these consumers. Idea’s deep-rooted network is supported by a strong sales team, which comprises locally employed people.

During the past year, Idea focused on efficient and effective delivery of services to users. Existing Idea Stores were revamped and over 200 service stores were launched in rural and semi-urban areas. In addition, in order to obtain a wider spread in rural areas, the company adopted a more granular approach of hiring “sons of the soil” for enhancing service and distri-bution. The idea was to hire someone located in the heart of the region being covered, even though less qualified on paper. Today, a network of over 4,500 people covers 99 per cent of villages and reaches out to Idea subscribers in the remotest corners of the country.

What are your views on the regulatory and policy environment in the country? What is your regulatory wish list for 2015?

With the increased emphasis on the Digital India programme, which is based on mobile broadband, the need of the hour is sufficient supply of spectrum. New technologies require larger chunks of spectrum and spectrum planners must keep in mind the importance of contiguous spectrum while planning its availability in order to ensure its most efficient use and greater optimisation. The pricing should be reasonable for investors in the telecom sector, which is already under huge debt. The regulator has taken initial steps to put the sector back on the path of growth. Policymakers should now ensure that the direction shown is followed.

What are some of the areas of concern for the company? How do you plan to address these?

Though the company has demonstrated that its focused approach does not let its performance be impacted by obstacles in the external environment, there is still a lot to be desired, especially on the undue penalties front, as well as in terms of long-term industry, investor and customer-focused policy formulation and planning. The cost of services is expected to increase as spectrum, which is the key raw material for the sector, is now being charged 9-12 times more than the originally administered price of Rs 16.5 billion.

What are your plans regarding the upcoming spectrum auction?

Idea’s licence renewal entails 11-12 per cent of its total spectrum. We are well prepared to cover our strong markets where licences are coming up for renewal. We will ensure the continuity of services to our subscribers in all these markets.

What is your outlook for the telecom industry in 2015? What trends do you foresee in the sector?

In the recent past, there has been an evident shift in the medium through which consumers access information. The mobile screen is emerging as the preferred medium of consuming data. The telecom industry will see changes in line with the dramatic increase in data uptake.

There will also be a continued focus on the urban and semi-rural population with operators offering connectivity bundled with various value-added services to users. We expect the prices of smartphones to dive, which will positively impact the uptake of mobile data services. The year 2015 will also be crucial for the growth of mobile-based banking and financial transaction services.

What will be the key priorities for Idea Cellular in 2015?