Idea Cellular: Spreading its wings

Idea Cellular went full throttle on targeted expansion and made the most of dwindling competition

Idea Cellular, on the back of a successful expansion strategy, strong category insights and a decentralised, local servicing plan, became a player to reckon with during the slowdown. Here's how.

In February 2012, sentiments in the Indian telecom industry plummeted to a new low when the Supreme Court cancelled 122 unified access service licences issued in January 2008. Idea Cellular lost seven licences overnight. On the flipside, while it proved to be a good news for some players because it cut down on competition, the regulatory environment only got tougher. Increasing regulatory and spectrum costs, rock bottom tariffs and a dip in investments due to policy flip-flops, coupled with the economic slowdown, created one of the toughest market conditions to perform in.

Despite these headwinds, Idea relied on strong execution, quality of service and a focused consumer strategy to sail the brand through. In fact, Idea improved revenue market share (RMS) from 15 per cent in Q4 FY 11-12 to 17.2 per cent in Q2FY15 - an increase of over 1.4 percentage points from Q2FY14 . The company proved to be among the fastest growing Indian telecom companies by recording over one percentage point growth in revenue market share year-on-year.

"The turnaround started in 2006 after the takeover by Aditya Birla Group. We then decided to make Idea a pan-India player," says Shashi Shankar, chief marketing officer, Idea Cellular. While in 2008, Idea was present in 15 circles, in 2009-10 Idea gained national presence. It started with a strengthening of the network in two phases. First, Idea invested in those circles where it was an incumbent player, to ensure the best coverage, network, distribution and servicing. The second phase involved targeting newer circles with a large rural population post-2008, including UP East, Rajasthan and Bihar - areas with relatively lower tele-density. It can be argued that rural areas offer smaller ARPUs (average revenue per user), but to Idea's advantage, the subscriber base was growing rapidly, as these were markets with unaddressed needs. It is no surprise that the telecom major is doing well in rural circles like MP, Maharashtra, Gujarat and UP West.

The brand then followed this up with its unique 'sons of the soil' plan to make sure all rural retail outlets got covered and serviced. Under the plan, it recruited local people for sales and trained them. "These sales people did a better job of servicing because of the local knowledge and rapport they could build with local people," says Shankar.

Next, Idea had an option of going through the indirect distribution route but wanted to be in control of the last mile, so built its network on the direct distribution model. While other telcos were looking at centralisation, Idea continued to look at every circle as a 'country' in itself. "Idea's execution was largely decentralised; local people were empowered and organisation structure was lean," says Prashant Singhal, global telecommunications leader, EY. According to Singhal, Idea Cellular benefitted from infrastructure sharing, connecting with consumers by educating them on how mobile internet or a phone can change their lives, and building a lean and decentralised organisational structure. Not much churn in senior management is an added bonus, leading to consistency.

"The core of our strategy is 'leading by the brand'. We didn't flag our products as much as we spoke to consumers about ideas - how a mobile service can solve problems which they face in society. People believe it is a company with a difference," Shankar sums up.