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Top10: 7 - Idea: The Innovator

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VoicenData Bureau
New Update

It was the year of 'innovation' for Idea Cellular. The

company launched a slew of innovative products, which not only helped Idea gain

a foothold in all the eight circles it operates in but also get better ARPU

levels.

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The company generated revenue of Rs 2,966 crore, up 31%

from the previous year.  The net

profit was Rs 220 crore. Though the tariffs fell 20%, Idea managed to maintain

its margins. The company's subscriber base increased from 5 mn in FY 2004-05

to 7.4 mn in FY 2005-06.

IDEA





Area of operation: Cellular

Services




Address: Idea Cellular, 11/1, Sharada Centre, Off. Karve Road, Pune
- 411004, Maharashtra



Phone: +91-20-56412222


Fax: +91-20-9850003498


Website: www.ideacellular.com 


For the first time in the country, Idea came out with

pre-paid royalty program, wherein subscribers have been offered extra talktime,

provided they stay connected with the company for three months. It also launched

'Pay Easy' facility for its subscribers, so that they can make payments to

any Idea retailer across the country. To counter the Blackberry, Idea came up

with its own e-mail solution 'Idea mail' that didn't require any e-mail

enabled handset.

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The company also gave the flexibility to its pre-paid

customers to choose between fixed monthly rental, talk time and validity. This

scheme helped increase ARPU levels of the company. The average ARPU of the

company was Rs 400 last year.

The tie-up with HDFC to launch co-branded card helped both

the companies acquire more customers. It helped Idea customers avail discounts

in home loans from HDFC and similarly HDFC customers got incentives on Idea's

post-paid connections. When other operators were busy announcingÂ

'lifetime' schemes, Idea came out with 'two-minutes' of free

outgoing.

HIGHLIGHTS

  • 'Bill Flash'

    got recognition at 3GSM conference

  • Added 2 mn

    subscribers

  • Invested Rs 1,200

    crore in network expansion

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The company won applaudes at the international level also.

Its 'Bill Flash' product bagged an award at the 3GSM conference held in

Barcelona recently.

Idea continued with its network expansion last year. It

invested around Rs 1,200 crore in network expansion in 1,944 towns and 19,500 km

of highways. It is now planning to add three more circles to its kitty-UP

(East), Rajasthan and Himachal Pradesh. The network has already been rolled out

in these states and commercial launch is expected by October this year. It has

planned a capex of Rs 2,800 crore this year, of which Rs 600 crore would be

spent in the new circles.

'Idea will be

differentiated by service delivery'

Despite a dip in

tariff and ARPU, how did Idea manage to maintain its margins?



We took number of steps to achieve that. Our in-house expertise to

develop products and make them user friendly helped reduce cost. We

don't believe in outsourcing and hence, did everything on our own, right

from network management to customer care. Today, network maintenance is an

uphill task for operators. We started sharing network with other

operators. We almost do 48% of network sharing with operators except

Reliance. These small steps that we took last year, translated into

massive cost savings.

CEO



Vikram Mehmi

What steps have you

taken on the customer care front?



Customer care is an important component of our overall growth plan. We

have centralized customer care center in Mumbai and Pune. We have

recently, pumped-in lot of money in the upgradation of these call centers.

These are now state-of-the-art customer care centers in Asia. Our priority

is to have quick turn around time for customer queries. That's the

reason we have consolidated our northern region customer care in Delhi and

the rest is being handled by our Pune center. Now that we are adding more

circles to our kitty, the focus would be more on enhancing the capacity of

these centers.

What is your

distribution strategy?



The service delivery mechanism has always been a part of our strategy.

Idea services will be differentiated by service delivery and we want to

become a benchmark for other service providers, as far as service delivery

is concerned. We will have a distribution network lead in all the circles

we are operating in and we will maintain this lead. We have around 1.3

lakh retailers, 70 company owned showrooms, and 500 franchisee showrooms

in all these circles. We are actually redrawing our showroom strategy and

new showrooms will have uniform look and experience of our products, which

will eventually benefit customers.

Though you don't

have national presence yet, you have been very aggressive on branding. Has

it helped in customer acquisition?



We are present in eight circles and we will soon start our commercial

operations in another three circles. Besides this, we have already filed

the application to start operations in Mumbai and Bihar. So within few

years we will have a national presence. We have invested a lot in

branding. We don't have any brand ambassador because we don't believe

in it. In India only two things sell-bollywood and cricket. We have

sponsored film shows and had bid for sponsorship of the cricket team. We

believe in local branding. That's the reason Idea is more visible in

hoardings and other stuff.

After being taken

over by the Birlas, what difference do you see in the approach as far as

telecom business is concerned?



Idea is a part of the growth strategy of the Birla group. Now there is

no uncertainty and the new management is very keen to see this business

grow. Our credit worthiness and image will significantly improve in the

market. We will leverage on synergies within the group and the company

will leapfrog in the coming years.

Idea also embarked on an aggressive branding campaign

wherein it sponsored international events like IIFA awards and has the rights

for organizing it for three years. It also organized events such as Sonu

Nigam's live shows in 22 cities across the country. It had also bid for

sponsorship of Indian cricket team with Rs 275 crore and was at the second

position when Sahara bagged the rights for Rs 325 crore. The company will

continue its focus on entertainment industry, as it believes that entertainment

is the core for any value-added services in India.

Idea is not gung ho about 3G and would like to wait and

watch its rollout in the country. The company prefers HSDPA to 3G, as it

believes that the rollout of HSDPA would benefit customers in the long run.

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