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STRATEGIC ANALYSISOF IDEA

CELLULAR

Section D Group 3Vaibhav Sathe (PGP26182)Varun Boppana (PGP26206)

Rahul Satpathy (PGP26233)

Sai Chand Chintala (PGP26239)

Sneha Pandit (PGP26242)

Gopi Krishna NV (PGP26248)

Chandrasekhar Y (PGP26254)


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ABOUTTHECOMPANY

Part of the ABG conglomerate

Current market share of 11%

22 Telecom circles

ABG 49.1% and AXIATA 14.99%

3G licenses in 11 circles

3/2/2013

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Strategic Analysis of Idea Cellular


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SWOT ANALYSIS

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KEY CHALLENGES

Need for diversification

Reduce Operational Costs

Increase ARPU

Increase Enterprise Customer Base

Increase presence in metros

3/2/2013 Strategic Analysis of Idea Cellular

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CORPORATE LEVEL STRATEGY

Mergers & Acquisitions

Industry heading towards imminent consolidation

Should target smaller companies with synergies

Subscriber base linked to allocation of additional spectrum

Proposed M&A norms by TRAI to revise upward the

minimum number of competitors to be present in each

telecom circle.

Idea should consider gaining first mover advantage in

consolidation.


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Diversification Broadband & IPTV

+ Broadband Penetration of 1% (11.21 million)

Government Plan to increase broadband connectivity like

Bharat Nirman 60,000 km of fiber optic network can be leveraged for

backhauling

- High Capex costs - Last mile connectivity

Existing fixed line DSL Easier to convert to Broadband ratherthan new provider

IPTV Not enough bandwidth commissioned

Idea shouldnt diversify into Broadband services


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DTH

220 out of 370 million TV sets belong to low density

rural areas

Synergize with telecom services for billing and customer

support to the DTH

Leverage powerful telecom brand and marketing

campaign of What an idea sirjee

Customer acquisition from the local cable operators

In-flight WiFi using use DTH infrastructure for the

same

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BUSINESSLEVELSTRATEGY

Coopetition

Indus Towers

Joint venture between Airtel, Idea and Vodafone

110,000 towers - worlds largest tower company

Decrease in CapEx and Opex costs

3G Tie-upAirtel, Idea and Vodafone - sharing the 3G networks in the

circles where they do not have licenses

Idea offering 3G services in Delhi, Kolkata via Vodafonesnetwork

Vodafone offering 3G services in Andhra, Kerala throughIdeas network

Airtel offering 3G services in Gujarat through Ideas network


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BUSINESSLEVELSTRATEGY

Rural Penetration

Relative saturation of the Metros and Urban Areas -

Urban Tele density for wireless subscribers is 150.06

Lower penetration in the rural areas Rural Tele density

for wireless subscribers is 32.75

The growth rate in the rural subscribers has been 48%

and 71% over the last 2 years

Lower ARPU, increased CapEx and OpEx

Margins to be a result of the volumes rather than higher

ARPU


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RURAL PENETRATION FUNCTIONAL

STRATEGY

Product

Cheaper handsets from Chinese ODMs

Preloaded application providing information aboutweather, agriculture, market prices etc.

GPRS at nominal/subsidized rates

Marketing - Distribution

Leverage the Business Correspondent channel MyCash tie up with Axis Bank as a distribution channel

An alliance with ITC e-choupal should be considered

Operations

Indus towers alliance Decrease in Opex


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FUNCTIONAL STRATEGIES

Operational

Tower Infrastructure Indus Towers into all 22 circles

Sharing of the backhaul infrastructure, pooling of

resources

Outsourcing of the call center operations (English)

Financial Low Cost Debt Financing in International Markets

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BALANCED SCORECARDTarget

Sr

No Objective KPI 2011 2012 2013 2014 2015

1Improve corporate

profitability Profit % 7% 8% 9% 10% 11%

2 Rural Diversification Rural ARPU (in INR, in real terms) 120 150 180 210 240Mobile device as % of e-choupal

users 2% 5% 7% 9% 12%

3 DiversificationRevenue of DTH as % of total

revenue 1% 4% 7% 10% 12%In-flight WiFi as % of business

travellers 1% 2% 3% 4% 5%

4Operational Efficiency

ImprovementPower and Fuel Cost as % of

revenue 7.79% 7.20% 6.60% 6% 5.40%

Manufacturing Expenses48.34

%45.43

%42.52

%39.61

%36.70

%

5 Financial performanceInternational to local currency loan

ratio 0.33 0.37 0.415 0.457 0.53/2/2013

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QUESTIONS

3/2/2013

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