Idea gets 'raw material' for data growth

With Delhi metro 900 MHz, Idea Cellular now has ability to extend its 3G services to 12 circles covering nearly 79% of its gross revenues

Idea Cellular, which bought top-up telecom spectrum in nine circles, claims it does not need more to grow its voice business. It says it is expecting its data usage and subscribers to swell manifold and is ready with ‘raw material’.

“We looked at the auction in terms of how to expand our data footprint. This auction has been wrongly termed as a GSM auction; it is more for data,” Himanshu Kapania, managing director, told Business Standard.

The operator spent as much as Rs 10,400 crore in the recently concluded auction. It claims this would allow it to launch the next generation of high-speed services in eight strategic markets where it is maintains leadership. These markets cover 64 per cent of its revenue and it will use 5 MHz of contiguous 1800 MHz spectrum. “We will able to offer services with a full range of technology. There is a transition taking place in the telecom sector from pure voice to mobile broadband growth,” said Kapania.

Idea did not acquire 3G (third-generation) spectrum in the metro circle of Delhi in the previous auction.

It will now be able to provide 3G services with 5 MHz on the 900 MHz band.

Idea now has the ability to extend its 3G services to 12 (of the 23) telecom circles, covering 79 per cent of its gross revenue, at Rs 25,558 crore in 2013.

Delhi was one of the most contested circles in the recent auction. As much as 105 per cent premia to the base price was paid by the operators which won the 900 MHz spectrum. “There was only one slot of the spectrum, with three operators who wanted these. There was a lot of interest, so the price was invariably high,” said Kapania. The operator will be able to look at launching high-speed data services through long-term evolution (LTE) technology.

Idea also said it would be able to recover the amount spent on the auction in two years. Internal assessments say data will see explosive growth at 20-25 per cent. Currently, the data market is 10 per cent of the total telecom market, at Rs 16,500 crore annually.

“The sector grew at 12-14 per cent for the past five years and is expected to grow at nine to 10 per cent annually. Of this growth, only five-six per cent will be from voice. The per cent of value-added services to the revenues will grow to 20-25 per cent from the earlier 10 per cent,” said Kapania.