idea cellular: strategy management

I d e aC e l l u l a r Group 10• Aaron- PGP07001• Arvind- PGP07016• Lalith- PGP07026• Mayukh- PGP07028• Meraj- PGP07029

Introduction

• Founded in 1985 by Aditya Birla Group, AT&T Wireless & Tata Group

• Headquartered at Mumbai, Maharashtra• Third largest telecom provider in India with 191 million

subscribers• Offers 2G,3G & 4G services pan-India• As of 2016 end, had revenues of Rupees 354 billion• After paying around $860 million in 2010’s 3G spectrum

auction, Idea launched it’s 3G service in 2011• As of 31 Mar, 2016, Idea Cellular offers it’s services in 13

telecom service circles in it’s own spectrum• Talks of possible merger with Vodafone India Ltd. doing

the rounds in 2017

3Values

01 02

Integrity: Honesty in Every Action

Passion: Energized Action

03

Option 03Commitment: Deliver on the Promise C

04 05

Seamlessness: Without Boundaries in Letter & Spirit

Speed: One Step Ahead Always

Company’s MissionIdea mission: “We will Delight our Customers while meeting their individual communication needs anytime anywhere”

4Macro Scenario

Political: TRAI and the Indian government have approved of many policies in recent times such as Spectrum Trading, Spectrum Sharing and Active Infrastructure Sharing. The ceiling on roaming charges and Interconnection Usage Charges have been reduced

Economic: Other than the Demonetization effect that was almost negligent up to now considering the current GDP report. India is a booming economy.

Social: On the customer front, India is the second largest wireless market in the world in terms of new subscriber additions. The total subscriber base has crossed 1 Billion during 2015-16 and stood at 1.05 Billion as of September 2016

Technological: Spectrum access is becoming a commodity and the services provided by the incumbent operator are the game changer

Environmental &

Legal-India has one of the most stringent EMF exposure norms in the world. In the case of non-compliance of EMF standards, a penalty of Rs. 5 lakh is imposed per BTS per Service Provider.

5Rivalry in Indian Telecom Industry

T Threat of new entrants: LowT

Bargaining power of buyers: HighB

Threat of rival products/services: Moderate to HighT

Bargaining power of sellers: Low to moderateB

6Competencies of Idea

Spectrum- Sustained advantage

Fibre Optic network- Long term point of parity

Tower Infrastructure- Competitive Parity

Idea Power brand- Sustained advantage

Strengths

o It will create biggest telecom company in

India

o Vodafone has good reach in urban

market

o Idea has good hold on rural market

o EBITDA margin will improve

M&A with Vodafone

Weaknesseso Merger entity will have to fight

for 4G users

o There may be some regulatory restriction

o Idea was removed from nifty fifty index

o Huge debt of 72000 Crore

o Who will control the new entity

Opportunitieso It may be effective shield against

increasing threat of reliance Jio

o Not only replaces Airtel but also keep Jio off

o Consolidation of separate and scattered market

o Can focus on better on both urban as well as rural

Threatso May still need to fight for market

o It can also face some regulation

o More than 50% market share

o More than 50% spectrum in circles and overall more than 25%

HR Strategies• Idea Cellular had a total employee count of 91500. 325 employees above 60 had quit between 2011 and

2016 and 400 young employees were hired in their place• Aditya Birla Group’s in house recruitment policies went under change. Professionals from other companies

were hired in the management team to help bring about the change• 360-degree appraisal: This was introduced in 1999. It permitted managers to raise questions over his

leadership style, managerial ability and also personal traits but he could not define what he expected from his employees. After the feedback, he issued each senior manager a six page letter mentioning the areas of improvement and his expectations.

• In 1999 KM Birla launched the Aditya Birla scholarship to promote excellence among student community to cultivate the leaders of tomorrow.

• Aditya Birla awards were launched in 1999 where team achievements were recognized every year• Organizational health survey which measured the “Happiness at work” index was introduced. This was used

as a parameter to track employee happiness.• Previously the hierarchy in the company was decided upon seniority instead of merit. He decided to

implement performance management systems, reviewed compensations and accentuated on training to bring meritocracy. Mr. KM Birla personally led the recruitment program from business schools.

12Idea & advertising

Line of Ads by Idea CellularIdea has always come up with catchy and interesting ads which have been consecutively successful in grabbing the customer’s attention. A few of the famous line of ads are Honey Bunny, IIN and What an idea sirjee.

13Future Technologies

2017:• Idea Music• Idea Games• Idea Videos

2018:• Idea TV• Idea News &

Mags• Idea Storage

In progress• Idea chat • Idea Money

With the advent of digital content service on a arise across the globe, Idea Cellular too has pulled up it socks. It has planned an array of services that it will deploy in the coming years. Reliance Jio, its biggest competitor has already made a mark in the area of digital content services

14Idea and competition

Competition product comparison chart

Distribution and Servicing Model

# 1.6 million Transacting Retailer

# 1 million Data Selling O/Ls

# 8,000+ Idea Service stores across formats

# 15,500+ agents, 33 call centers across India

# Mobile app for 24*7 customer support definitely

# 33,000+ Distributors, 54,000+ DSEs

# Digital sales& services

# CUGs17

16

Developments in Idea digital wallets and payment banks

Payment Bank:• Mobiles being used to pay for

goods, services, digital content, P2P transfers at physical (PoS) or remote (internet transactions) locations

• Offer financial products such as savings account, micro loans, insurance, etc. to a large segment of Indians who have remain deprived of such services so far

• Mainly targets Urban/Semi-Urban/Rural (SEC B,C & D) unbanked consumers who use mobile phones

• Aditya Birla Nuvo Limited (ABNL) got In-principle approval from RBI for Payments Bank. Idea holds 49% stake in a Joint venture with ABNL named Aditya Birla Idea Payments Bank (ABIPB).

Digital Wallets: • Primarily Urban (SEC A)

consumer, uses smartphone (data user) and Active banking user

• Key use cases: Mobile/DTH recharges, Utility Bill payments, Payments across E-commerce, Merchants, Taxi Aggregators, Travel portals (IRCTC), Availing Coupons

• Idea Digital Wallets – 2.05 Mn (EoP March ‘16)

17Market Composition

Distribution

Vodafone Bharti Idea AircelReliance (GSM) Reliance (CDMA) Tata (GSM) Tata (CDMA)BSNL (GSM) BSNL (CDMA) MTNL (GSM) Reliance Jio

Broadband service distribution

Bharti Vodafone Idea BSNL Reliance Others

Vodafone 200,721,247

Bharti 259,940,666

Idea 178,816,338

Aircel 90,140,979

Reliance (GSM) 87,159,985

Reliance (CDMA) Data Not Available

Tata (GSM) 47,658,059

Tata (CDMA) 9,395,721

BSNL (GSM) 92,909,555

BSNL (CDMA) 8,55,799

MTNL (GSM) 3,612,727

Reliance Jio 15,979,745

18KEY PERFORMANCE INDICATORS (KPIs)O P E R A T I O N A L I N D I C A T O R S

19KEY PERFORMANCE INDICATORS (KPIs)O P E R A T I O N A L I N D I C A T O R S

20KEY PERFORMANCE INDICATORS (KPIs)F I N A N C I A L I N D I C A T O R S

21KEY PERFORMANCE INDICATORS (KPIs)F I N A N C I A L I N D I C A T O R S

22QUALITY OF SERVICE

QoS Benchmarks for 3G Wireless Service Providers:• Network Availability:

• BTSs and Node-B's Accumulated downtime (not available for service) (%age) downtime (not available for service) (%age) ≤ 2%

• Worst affected Node B's due to downtime (%age) ≤ 2%

• Connection Maintenance (Retainability):

• Worst affected cells having more than 3% Circuit Switched Voice Drop Rate ≤ 3%

• Point of Interconnection (POI) Congestion ≤ 0.5%

QoS Benchmarks for 2G Wireless Service Providers• Network Availability:

• BTSs Accumulated downtime (not available for service) (%age) ≤ 2%

• Worst affected BTSs due to downtime (%age) ≤ 2%

• Connection Establishment (Accessibility):

• Call Set-up Success Rate (within licensee's own network) ≥ 95%

• SDCCH/ Paging Chl. Congestion (%age) ≤ 1%

• TCH Congestion (%age) ≤ 2%

23QUALITY OF SERVICE

QoS Benchmarks for 2G Wireless Service Providers• Connection Maintenance (Retainability):

• Worst affected cells having more than 3% TCH drop (call drop) rate (%age) ≤ 3%

• Connection with good voice quality ≥ 95%• Point of Interconnection (POI) Congestion (No. of

POIs not meeting the benchmark) • (Averaged over a period of quarter ) ≤ 0.5%

IDEA Kerala 1 Maharashtra 1 Mumbai 1 UP E 1

QoS Benchmarks for 2G Wireless Service Providers• Metering and Billing:

• Metering and billing credibility - post paid ≤ 0.1%

IDEA UP W 0.11 • Metering and billing

credibility - pre paid ≤ 0.1%IDEA Andhra Pradesh 0.26 North East 0.12 Rajasthan 0.18

• Resolution of billing/charging complaints

• 98% within 4 weeks • 100% within 6 weeks

QoS Benchmarks for 2G Wireless Service Providers• Response time to Customer for

Assistance:• Accessibility of call center/

customer care ≥ 95%• Percentage of calls

answered by the operators (voice to voice) within 90 seconds ≥ 95%

• Termination/Closure of Service:• %age requests for

Termination / Closure of service complied within 7 days (100% within 7 days)IDEA Kolkata 99.96

• Time taken for refund of deposits after closures (100% within 60 days)

IDEA Haryana 99.91

11Credit Analysis Test

Altman Test

• Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

• Where:• A = working capital / total

assets• B = retained earnings / total

assets• C = earnings before interest and

tax / total assets• D = market value of equity /

total liabilities• E = sales / total assets• this score is 4.41. • it means company is strongly

positioned and robustly healthy.

12Credit Analysis Test

Piotroski Test

• 9 criteria are considered; 0 for unfavorable and 1 for favorable

• Positive return on assets in the current year (1 point).

• Positive operating cash flow in the current year (1 point).

• Higher return on assets (ROA) in the current period compared to the ROA in the previous year (1 point).

• Cash flow from operations are greater than ROA (1 point)

• Leverage, Liquidity and Source of Funds

• Lower ratio of long term debt to in the current period compared value in the previous year (1 point).

• Higher current ratio this year compared to the previous year (1 point).

• No new shares were issued in the last year (1 point).

• Operating Efficiency• A higher gross margin compared to

the previous year (1 point).• A higher asset turnover

ratio compared to the previous year (1 point).

Idea’s Piotroski score is three, implies strength of company’s stock is average.

Thank You