Idea Cellular Prepares To Protect Its Turf Against Reliance Jio Assault
Idea rolls up its sleeves to take on data assault from Reliance Jio.
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The incumbent telecom operators are gearing to protect their turf. A day after Reliance Industries’ chief Mukesh Ambani announced his ambitious plans for his pet project Reliance Jio, Idea Cellular Ltd. on Friday unveiled its own plans to prepare to take on the new entrant.
Idea detailed various digital services it plans to launch in the current as well as next fiscal in an investor presentation filed on the Bombay Stock Exchange. Among the incumbents, Idea Cellular, owned by the Aditya Birla Group, is seen as the most vulnerable by analysts who track the telecom sector. Bharti Airtel currently has the highest market share, followed by Vodafone.
Gloves Are Off
The company said, “Idea currently is focused on expanding coverage rather than building capacity. We are strong in our established market” .
Currently, there are 322 million internet users across the country and it has a huge potential to tap the space with the help of Generation Z and millennials, Idea added in its presentation.
In the immediate future, the telecom company plans to come up with what they call Idea Game Spark in the third quarter of financial year 2016-17, and unveil other services such as Idea Chat, Idea Music Lounge, and Idea Movies studio in the fourth quarter of this financial year. Going forward, Idea plans to also come up with Idea TV, Idea News and Magazines, Idea Storage.
Idea is looking to ramp up its mobile wallet service Idea Money, which it claims has about 3.4 million customers already.
The new entrant Reliance Jio, has announced its intention to come up with its own Jio Music, and Jio Movies boasting a library of over 6,000 movies and songs. It has also announced free data, voice, and video from September 5 to December 31
Idea, however, its yet to roll out its 4G services fully across the country.
“Although it has to roll out the services (4G), it is reasonably well prepared to launch soon,”said Romal Shetty, head of the telecom practice at KPMG India. “These are not small companies and Idea must have thought through thoroughly,” he added.
The Story So Far
In a major development in the telecom sector for the year 2015-2016, Idea Cellular completed the renewal of its licences for the next 20 years in 16 out of 22 circles.
Smaller players in the sector such as Videocon and Aircel were already taken over by Airtel. Telenor also formally announced its plan to exit the country in July this year. This leaves the field open only to the big guns to play according to their strengths.
Shetty said that Idea is probably the strongest network in the rural sector and its strengths also include execution and rural distribution.
The Potential
Seventy-five percent of the new internet user growth is poised to come from the rural segment with connected rural customers to grow to 315 million by 2020, according to a BCG report, The Rising Connected Consumer in Rural India that Idea has cited in its investor presentation.
There is a huge potential for the data penetration in the country as well, the operator said. Market penetration for 3G (third generation) and 4G (fourth generation) enabled handsets is very low in India, at just 12.3 percent whereas in a developed country like Singapore and Japan, that number stands at 143 percent and 136 percent respectively, according to a report by the Telecom Regulatory Authority of India.
Idea Cellular is clearly trying to explore this potential but may face short-term pain due to increased competition, KPMG India’s Romal Shetty said, “Idea will not be blown away. The pain will be there for 12-15 months, but Idea will definitely not go away.”