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Idea will spend Rs 6000Cr to expand broadband infra: MD Himanshu Kapania

Idea Cellular will focus on building more wireless broadband infrastructure, and bandwidth to keep up with competition and growing demand for 4G data among users. The company’s MD and Director Himanshu Kapania said during a recent analyst call that the company will “start active infrastructure sharing in the new financial year with top 2 to 3 incumbent operators to further expand its services.” Active infrastructure allows telcos to use their own spectrum, but run this on equipment from other telcos/ISPs.

The company will also allocate Rs 60 billion as capital expenditure (CapEx) for FY 2017-18, primarily for building broadband infrastructure, apart from active equipment sharing arrangements. Kapania said that Idea has spent close to Rs 155 billion in CapEx in the past two years alone for expanding its wireless broadband capacity. He also points out that telecom companies are now focusing on building maximum broadband capacity (due to Jio’s entry) as opposed to the “age-old approach” of building capacity only when required or when demand goes up.

Note that Idea’s competitor Airtel already has active sharing tie-ups and with Idea reciprocating the same strategy, one can assume that incumbent operators are interconnected in terms of network infrastructure. Note that Bharti Airtel, Vodafone and Idea already own Indus Towers, a tower infrastructure firm.

Idea’s investments in Fiber

Kapania said that the company has a two-part strategy for expanding its fiber reach:

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i) “Expanding kilometers of fiber”: Idea added 29,100 Kms of fiber capacity in FY17 with the total capacity spanning 114,600 Kms.  Kapania said that “on an average, we’ve been rolling out (fiber) every year…plus/minus 5,000, 25,000 kilometers of fiber.” Idea does not provide fixed line broadband using fiber; rather, it uses a fiber backbone to support its 4G network.

ii) Installing more Point of Presence (PoPs): PoPs are Internet access points installed throughout the distance of a fiber network. By installing more PoPs, Idea can use them to transmit Internet bandwidth to Nodes (devices) connected to the network. Currently, Idea has 9.840 PoPs. Kapania said that Idea plans to install 3,5000 to 5,000 PoPs and also actively share PoP equipment with its competitors.

There is another way to look at this scenario. Idea, which is merging with Vodafone does not provide any consumer-facing fixed-line broadband service. Vodafone also does not provide fixed line broadband to home users. This can be problematic since both their main competitors—Airtel and Jio— are already making significant investments into fixed-line fiber services. Therefore, we can expect either Idea or Vodafone to launch its own set of fixed line fiber services to keep up with the completion. Vodafone India also owns YOU Broadband, which it acquired last year.

Idea’s current broadband infrastructure and usage

Total cellular sites (2G+3G+4G): 241,540 sites
2G sites: 131,486 sites
3G and 4G: 110,054  sites
Total (2G+3G+4G) additions in FY17: 50,004
4G Presence: 19 telecom circles.
Total (3G and 4G) smartphone count: 78.1 million
New smartphone additions in Q4FY17: 17.1 million
% share of 4G smartphones in Q4FY17: 75% (13.2 million)

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