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STRATEGIC ANALYSIS OF 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)
04/08/2023
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Strategic Analysis of Idea Cellular
ABOUT THE COMPANY
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
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Strategic Analysis of Idea Cellular
SWOT ANALYSIS
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Strategic Analysis of Idea Cellular
KEY CHALLENGES
Need for diversification
Reduce Operational Costs
Increase ARPU
Increase Enterprise Customer Base
Increase presence in metros
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Strategic Analysis of Idea Cellular
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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Strategic Analysis of Idea Cellular
CORPORATE LEVEL STRATEGY
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 rather than new provider IPTV – Not enough bandwidth commissioned
Idea shouldn’t diversify into Broadband services
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Strategic Analysis of Idea Cellular
CORPORATE LEVEL STRATEGY
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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Strategic Analysis of Idea Cellular
BUSINESS LEVEL STRATEGY
Coopetition Indus Towers
Joint venture between Airtel, Idea and Vodafone
110,000 towers - world’s largest tower company
Decrease in CapEx and Opex costs 3G Tie-up
Airtel, Idea and Vodafone - sharing the 3G networks in the circles where they do not have licenses
Idea offering 3G services in Delhi, Kolkata via Vodafone’s network
Vodafone offering 3G services in Andhra, Kerala through Idea’s network
Airtel offering 3G services in Gujarat through Idea’s network
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Strategic Analysis of Idea Cellular
BUSINESS LEVEL STRATEGY
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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Strategic Analysis of Idea Cellular
RURAL PENETRATION – FUNCTIONAL STRATEGY
Product Cheaper handsets from Chinese ODMs
Preloaded application providing information about weather, agriculture, market prices etc.
GPRS at nominal/subsidized rates
Marketing - Distribution Leverage the ‘Business Correspondent’ channel –
‘My Cash’ 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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Strategic Analysis of Idea Cellular
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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Strategic Analysis of Idea Cellular
BALANCED SCORECARD Target
Sr
No Objective KPI 2011 2012 2013 2014 2015
1
Improve corporate
profitability Profit % 7% 8% 9% 10% 11%
2 Rural Diversification Rural ARPU (in INR, in real terms) 120 150 180 210 240
Mobile device as % of e-choupal
users 2% 5% 7% 9% 12%
3 Diversification
Revenue of DTH as % of total
revenue 1% 4% 7% 10% 12%
In-flight WiFi as % of business
travellers 1% 2% 3% 4% 5%
4
Operational Efficiency
Improvement
Power and Fuel Cost as % of
revenue 7.79% 7.20% 6.60% 6% 5.40%
Manufacturing Expenses
48.34
%
45.43
%
42.52
%
39.61
%
36.70
%
5 Financial performance
International to local currency
loan ratio 0.33 0.37 0.415 0.457 0.5
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Strategic Analysis of Idea Cellular
QUESTIONS
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