On Idea Cellular’s earnings conference call for the quarter ended December 31st 2010, Idea MD Sanjeev Aga said that the company would launch 3G services in its 11 circles in the next few months. He also discussed some other issues – the most interesting among then, a controversial issue around Telecom Operators operating as banks. Notes from the conference call:

M-Commerce: Aga said that M-Commerce is really mobile money transfer, but there are still issues with regards to information technology and systems to be enabled both at the level of the bank and the telecom company, adding that m-commerce will not take off until the whole ecosystem is ready, including taking care of factors like settlement agencies, MasterCard, VISA, the Reserve Bank, the regulations, money laundering, Know Your Customer, etc. Idea, which has tied up with Axis Bank, will launching money transfer within India, from Dharavi to some district in either eastern UP or Bihar, but, Aga added, this will not have commercial significance for the company in the next one, two, three quarters.

Telco’s As Banks: On the ongoing debate of mobile operators were perfectly suited to run banks and in the long-term this technology has the potential of actually displacing existing methods of banking technology. He said that if banking did not have a legacy of hundreds of years, today, bankers would have been carrying, running their systems on the kind of technology mobile operators have, because this is the quickest, safest, real-time,encrypted and cheapest technology.

Note that this is in total contrast to the Planning Commission’s opinion that Telecom operators shouldn’t start Banking companies.

Rate Per Minute Trends: On being asked about the RPM stabilizing with respect to competetion offering lower RPMs, Aga candidly replied that majority of operators are deep in the red with many of them having no hope of ever coming into the black. He said that in infrastructure based sectors like telecom, where you have very high fixed costs, there is always a temptation or a tendency to salvage as much of the variable cost as one can. “In the sector in the last few months, people are operating at such rates, that they actually have negative revenues, because their interconnect cost is greater than the tariff they are charging. So there is no answering for what short run pressures will do to people. But having said that, we believe that the pressure on price has come to a stage and it is becoming unbearable for some of the weaker operators.”

He said that Idea’s own rate declines used to be 3 paisa, 2 paisa and this quarter it was just 0.5 paisa, with some of the headline rates  not declining at all; the decline maybe more in STD rates or some of the fringe rates.

On Aggressive MNP Advertising: On the company aggressively advertising on count of MNP, Aga replied that the advertising that Idea is doing for MNP, should be seen as general brand advertising. He said that since it is coming at this period, it is riding on the hook of MNP, but it would be inaccurate to say that this entire advertising was executed, created only because of MNP. Advertising, being on an year to year basis, there were no planned peaks or troughs due to MNP. Aga does not expect MNP to have a game changing impact that has been talked about by some.

Data Usage: Aga said that although it is a long way off, more and more customers have starting using 2G data. The company is seeing a very significant uptake on data as factors like handset availability, content and mobile data pricing have been synchronized. He said that the increase is on a month on month basis.

Related:
Idea Cellular Q3-FY11 ARPU At Rs 168; Profit Up To Rs 243 Crore