Idea Cellular, the country’s third-biggest telecommunications operator is betting big on uptake of data services but expects the offtake to be slow for 4G services, similar to the time taken for offtake of 3G services. At the same time, the company is also watching its competition to increase rates for its voice and data services to arrest the decline in realisation rates. P Lakshminarayana, chief operating officer of corporate at Idea Cellular tells R Jaikrishna that the company is keenly watching the developments in the 4G space, as Reliance Jio Infocomm is scheduled to launch its services this year. Excerpts:
There is a sense that 3G services offtake is slower-than-expected, what is Idea Cellular’s views?
Although 3G is about five years old in this country, out of 100 mobile phone subscribers, approximately about 30 have a 3G device, which means they have the potential to use 3G services. This after five years of launch. Is this good? Well it is a difficult question to answer. Is this sufficient? definitely not. Will it grow? Definitely yes. I wouldn’t even say lower-than-expected kind of a growth, this is how things have grown. Will it grow faster, we hope that it will grow faster. Is it growing faster than the last few years, of course it is. And we will continue to keep our eye on the ecosystem and participate in that growth, and we are optimistic that we will do our bit pretty well. I would tend to think it is ditto as we had just got into 4G, we are less than five months old in 4G, and the consumer experience that we have been able to deliver all across, several circles, irrespective of our standing in those circles has been exceedingly good, the feed back has been very good, and we are keeping an eye on the 4G ecosystem. When I say ecosystem, it is not only devices. We are investing just at the right time to make sure….In fact our managing director has said it will be above R6,000 crore…that’s the kind of investment. We are committed to make sure that our consumer experience is going to be of great importance for us.
Why invest heavily on 4G when 3G adoption is slow and realisations are low?
I would not put a definite statement saying that 3G has not taken off, or taken off. Now these are all processes which will develop over a period of time. Now if somebody has to say has 2G taken off? Now that has also taken time. Things take time to develop and similarly 3G will take its own time, and 4G will take time. The only hope is that the time taken for every technology seems to be shorter. Why are we participating in 4G? Because we do believe 4G is going to be a major play into the future, and that is the right step forward, and that is the reason we are investing in 4G and launching 4G.
Having said that, we see your realisations on data have been declining every quarter? How long can you sustain with these kind of rates?
Our rates are one of the lowest in the world. This is a universally acknowledged fact. The costs have been on the rise. These two don’t marry, or to marry both of them is a very difficult situation. Therefore, the rates we also hope will go up. That is going to be our endeavour. Rates are dependent on two things: one is our own fixing of rates is concerned; and two is our competitive play in the market, that will also fix rates. We need to constantly play between the two to ensure that we balance. There are some signs of rate stabilisation. There have been attempts by us to increase rates. If you see between Q4 and Q3…our rates have gone up both in data and also in voice. Cutting down on promotions is one way of increasing rates. You cannot say that I will increase rates in one particular way…if tomorrow the ecosystem outside, our competitive frame..if we see opportunities definitely we will increase rates. There is nothing called increase in headline tariff. There is a particular tariff, all the other tariffs are promotional. We run promotional tariffs at various points in time, and therefore withdrawal or increasing promotions is something internal. It’s not completely internal also because we need to participate in the market which is particularly aggressive, we need to balance. That balance is something a holy grail which we pursue all the time.
Are you going to cut down on promotions this quarter as well, because that impacted your subscriber additions and usage in the past quarter?
I don’t think one can say one thing and get away. I don’t think there is only one direction in which we can go and stay in an environment which pulls you in an environment…which has got a mix of huge number of factors. You’ll have to keep on fine tuning our methods as we go along. That’s something we have been doing, and we will continue to do.
Will Idea Cellular bid for the spectrum in the 700Mhz band, since you need bandwidth to expand.
At this point in time, my most honest answer is: I don’t know. There is no real answer either. If somebody were to ask me what are you planning tomorrow. Planning possibly, but will you do it tomorrow. I do not know, it depends. Well, things keep getting discussed till the event happens. Now various options keep getting evaluated till the event happens. If anyone were to give you an answer different from this, I don’t think that will be an honest answer. Everyone will be evaluating in their knowledge till the event happens. It’s a obvious thing. This is what we will also be doing. What we do exactly do, or whether we will do it or not? I don’t know. We have spectrum. As we get more consumers, we have been buying spectrum and we continue to do that.
Do you expect data usage to go up with the partnership with Google?
Directionally, will the data consumption on an average by the consumer go up, we expect so. Will the range of activities the consumer is participating, of course we expect so. Earlier it was only email, it will be email plus possibly watching videos, plus games.
