Highlights from Idea Cellular’s quarterly conference call for the quarter ended 30th June 2012:
- Mobile Number Portability - Idea says that it registered a cumulative net gain of 3.5 million customers as on 10th July, 2012, from other operators, and that nearly one out of four MNP customer in India who chose to port out selected Idea.
- 3G: Idea talked about the split judgment by the TDSAT court on 3G Intra Circle Roaming agreements, and said that it will continue as the interim order holds. It also mentioned the drop in the base tariff of the 3G services and changes in the 3G tariff plans. It noted that India has the lowest realized rate per MB, but felt that the low tariffs would help ‘drive the 3G services away from natural large screen users to mass market,’ and that there will be a transition of customers
from low speed GPRS to 3G wireless broadband services. Idea has 3G coverage in over 3,000 towns and over 10,000 villages. Responding to a question, Idea COO, Himanshu Kapania said that cuts in 3G data prices have lead to increase in demand.
- 3G Subscribers & Usage: Idea as on 30th June 2012 reported 3.1 million active subscribers on 3G platform, a growth of 5 lakh active 3G customers during the quarter. The average usage on 3G platform is 375 Megabytes per month and 3G data incremental ARPU was Rs 88.
- Data revenue analysis: Overall wireless data as a percentage of service revenue for Idea has now reached 4.8%. Data revenue was reflected as a subset of the overall non-voice revenue, currently contributing 14.5% of the total service revenue in this quarter.
Idea said that during the last one year, mobile data had been growing for on a cumulative quarterly growth rate of nearly 30% per quarter. However, it blamed the steep decline in per MB realized rates for the surge not reflecting in data revenue. It said that if it was able to sustain the volume of growth, the same will start reflecting in its top line in the next few quarters.
- On decline in growth of VAS revenue & new SDP regime: The Idea management said that the pressure was primarily on account of non-data value added services. It discussed the introduction of the new service delivery platform and said that the introduction of the platform will improve the quality of provisioning in the long-term, management of churns and will give more power in the hands of customers to manage their VAS services.
It said that ‘there may be short term pain, but in the long run VAS will continue to be a significant portion of our total revenue.’ Idea started work on service delivery platform about two years ago but its actual introduction started about two quarters back. The platform was now in full force during the last quarter and Idea expects to complete its service delivery for most of its voice services as well as for its VAS services and messaging services in the month or two.
Idea was not including SMS interconnect revenue as a part of our VAS, earlier, which it has decided to include from this financial year.
- On the upcoming 2G spectrum auction: Idea said that it was keenly awaiting the final Cabinet decision on spectrum auction schedule, quantity of spectrum, payment and mortgage terms, pricing of spectrum; both the reserve price and the linked spectrum usage charges. It was also awaiting the final EGoM and Cabinet decision on prospective onetime charges for existing operator’s spectrum, basis of the charge and quantity of spectrum to be linked to the final market determined auction price.
- Legal cases: Idea informed that the final judgment by the division bench of Delhi High Court on the Idea-Spice merger dispute was pronounced on 13th July, 2012, in which the division bench has again confirmed the amalgamation of erstwhile Spice Communication with the Company effective 1st March, 2010. It also added that the bench also modified the earlier order of the single judge dated 4th July, 2011 by omitting the direction which had transferred to and vested in the DoT, the six licenses of erstwhile Spice. The bench has now given a fresh direction to the DoT to decide on transfer of Spice licenses to Idea, within a period of three months, and has said that the same maybe referred to the TDSAT in case there’s a dispute, informed Idea.
- Idea claims to enjoy a 15% revenue market share, ranking 3rd in the sector. On an incremental Revenue Market Share basis, Idea registered a 24.2% incremental revenue market share in Quarter 4 of FY12, compared to Quarter 4 of FY 11. The company claims to have witnessed over 20% VLR addition and minutes market share on a quarter-on quarter basis.
- Gross Revenue – Idea blamed the introduction of Telecom Consumer Protection Regulation by the TRAI, because of which it had to modify its prepaid voucher offering and lead to the slowing down of Idea’s strong revenue performance of the last two quarters, as it recorded a sequential revenue growth of 2.5%.
- Decline in ARPM: Idea said that the trend of decline in average realization per minutes continued again in this quarter, due to the marketplace battle, overcapacity and the company’s inability to pass the full impact of service tax rate change of 2% to the consumer. This quarter, the slide in ARPM was 2.3% to 41.2 paisa, a drop of 1 paisa per minute when compared with the rate realization of 42.2 paisa in Q4 FY12. Idea predicted a muted revenue growth of the industry in the first half of the financial year.
Download : Full Transcript (pdf)