Idea Cellular hikes capital spending guidance to launch 4G

By Aman Shah

MUMBAI (Reuters) - Idea Cellular Ltd has raised its annual capital spending guidance by about a fifth as it prepares to roll out a high-speed fourth-generation (4G) network to cater for rising demand for mobile data.

The country's third-biggest mobile operator now expects to spend 60-65 billion rupees ($945 million to $1.02 billion) in the year to March 2016, up from the 50-55 billion rupees guidance given in April, Chief Executive Himanshu Kapania said on Tuesday.

Earlier in the day, Idea reported a better-than-expected 28 percent rise in quarterly profit, helped by higher data revenue, and said it would introduce 4G services in 10 of the country's 22 service areas next year.

The number of mobile web users in India is expected to grow by around 28 percent annually between 2013-2017 and reach 314 million by the end of 2017, according to a report released by the Internet and Mobile Association of India and KPMG.

Indian mobile operators are bracing for even more competition in an already cutthroat market as Reliance Jio, the telecoms unit of conglomerate Reliance Industries , plans to launch 4G broadband services by December.

Currently only top Indian operator Bharti Airtel offers 4G services, and only in some service areas.

"The 4G approach is to go into well-evolved markets where already adoption of 3G is strong and where there has been an early start of people buying 4G devices," Idea CEO Kapania told reporters in Mumbai.

Idea, part of the Aditya Birla conglomerate and also nearly a fifth owned by Malaysia's Axiata , spent close to $5 billion in a government airwaves auction in March, betting big on the India's significant mobile data potential.

Kapania said Idea was evaluating a range of digital services and apps in areas including entertainment, communications and utilities to complement its 4G entry and would even consider using its retail network to distribute 4G devices.

($1 = 63.5328 rupees)

(Writing by Devidutta Tripathy; Editing by Pravin Char)