Responding to an analyst query on whether telecom operator Idea Cellular has seen cannibalization of voice by VoIP services, chief executive officer Himanshu Kapania said that “about 0.1-0.2%” of the company’s traffic is moving on VoIP. Kapania said that even in developed markets (offering limited bundled services), only about 1.5-2.5% of traffic was on VoIP
Kapania added that the company will “budget” some of the cannibalization. “Our general sense is, some cannibalization will happen and we will budget it in, but it is not something of a fearful nature that we have to worry about. What happened to SMS will not happen to voice given that it is an app-to-app call,” he explained. Kapania conceded that the company was witnessing cannibalization of SMS by messaging applications.
Strategy on LTE
Kapania also said that the company has advanced its launch of LTE services by one year to 2016 as it felt the prices of equipment and smartphones which can support the technology have dropped. “Our big worry when we started to valuate launch of LTE in 2014 was that then the equipment prices were far in excess to the equipment prices that were available on 3G. With almost 170 operators coming on board with the technology, the equipment prices are now tending towards to 3G prices. So when we see the sum total of devices, equipment, as well as consumer acceptance we felt there is no point delaying our LTE launch to 2017 and we have preponed our launch by one year in a phased manner luanching in 2016,” he said. Note, Kapania in a call in October 2014 had explicitly stated that he does not believe LTE technology is mature enough to gain scale.
The company had acquired 55Mhz of contiguous 5Mhz 1800 Mhz spectrum areas in 10 service areas in 2014 and 2015 for the launch of 4G services on LTE platform. The 10 circles where Idea will be launching 4G services are: Kerala, Maharashtra, Goa, Andhra Pradesh, Karnataka, Madhya Pradesh and Chhatisgarh, Punjab and Haryana, Tamil Nadu, Orissa and North East. “Initially we are going to focus 4G in four telecom circles where Idea does not own 4G services including Karnataka and TN as well as markets where we are experiencing excellent 3G services demand as well as town categories where latent broadband demand outstrips the supply of mobile broadband services,” Kapania explained.
Subscribers with 3G devices not using services
Idea also said that only 51% of their users who have 3G mobile handsets are using the company’s high speed broadband service. As of June 30, 41.5 million Idea subscribers own a 3G device showing a penetration of 25.6% of the base, Kapania revealed. “While availability of 3G phones with existing users provide us a platform to transition these customers to Idea high speed broadband services, massive company drive is needed, in terms of coverage expansion, introduction of localized, relevant and persuasive services, customized and regional content and multiple tier packs.”
Idea is also in the process of reviewing its existing value added services and expanding its services portfolio. The company said it has taken in-principle decision to introduce its own range of digital services either through in-house development or in partnership across various categories such as entertainment, information, consumer communications, utilities etc from the next financial year.The company also plans to expand its digital payments services using the Reserve Bank of India prepaid payments instruments (PPI) license it acquired in 2013 while they wait for the final guidelines for the payments bank application of Idea’s promoter company.