Ways to Increase the Average Revenue Per Subscriber for Idea Cellular Ltd.

Submitted to: Prof. A.K.Biswas

Submitted by:
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Dharmender Roll No-211

Summer Trainee PGDM (International Business) BIMTECH

ACKNOWLEDGEMENT

I would like to extend my sincere thanks to my corporate guide Mr. Kumud Singh (Manager Corporate Sales, Idea Cellular Ltd.) and Mr. Ranjan Kaushal (Asstt. Manager, Corporate Sales, Idea Cellular Ltd.) for giving me an opportunity to do my summer training at their esteemed organization and assigning me a project topic. I am also thankful to them for providing continuous cooperation, support and expert guidance throughout the project. I would also like to pay my acknowledgements to the all employees at Noida DST who helped me to get the field experience under their guidance. I would also like to pay my acknowledgements to my project guide Prof. A.K. Biswas for acting as mentor and as catalyst during the entire duration of my project. I am also thankful to him for providing me with useful references and information, which were of significant importance for the completion of the project. I would also like to pay my acknowledgements to all the corporate executives, for taking out time from their busy schedule and providing me with relevant information, which contributed significantly to my project analysis.
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Contents
Sr. No. Chapter 1 1. Chapter 2 2. Chapter 3 3. Chapter 4 4. Chapter 5 5. Chapter 6 6. Chapter 7 7. Chapter 8 8. Chapter 9 9. Chapter 10 10. 11. 12. References Appendix-Questionnaire Limitations 57 58 59 Recommendation 56 Conclusion 54 Findings & Analysis 39 Current Trends 33 Description of Current Situation 13 Methodology 12 Objective & Scope 11 Introduction 7 Executive Summary 4 Topic Page No.

Chapter 1 Executive Summary

Telecom Industry in India is touching new heights everyday and promises to be one of the biggest markets across the globe but all Indian telecom companies are facing the problem of decreasing ARPU (Average Revenue Per User). The project done with Idea Cellular Limited was on to find the ways to increase the ARPU. The call rates in India are lowest in the world and therefore there is a pressure on service providers to increase the ARPU because their profit margin is decreasing continually. The objective of the summer project was to understand the customer preferences while choosing a telecom service provider. Other main objective of the project was to study the trends in the International Telecom market. The scope of the study was limited to Noida and Greater Noida region. This project was conducted for Idea Cellular Limited to assess the preferences of mobile users in India. . Data collected with help of questionnaire was put in excel sheets. A survey of 400 Mobile users was conducted in Noida and Greater Noida. The sample has covered the mobile users of other service providers also as to understand the competition and their strength and weaknesses. The research design chosen was Descriptive Research Design because the survey was conducted to get the customer insight and to know their preferences. Also it was to find out perception about the service provided by telecom companies. So mainly it was to describe the telecom market characteristics. The sampling done was random sampling while conducting the survey. The survey was conducted in Noida and Greater Noida region. A total of 400 telecom users were
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studied, and most of them belonged to the youth category because my main objective was to find out the spending habit of Indian youth. And the reason behind this was that its the youth who is revenue generator today. The secondary data was collected to understand the market trends and forecast in developed and developing countries. This data was mainly collected from the research companies sites on the basis of their market research. These trends then were analyzed whether these can be applied by Indian Telecom players. The research showed that Idea Cellular Ltd. has a low image among its own customers. They are not fully satisfied with the service they are getting. The main reason for choosing a service provider is connectivity and Idea is not meeting the expectations of the customers on this front. Idea is not able to retain its customers as compared to other service providers. The churn rate for Idea Cellular is high and it has maximum of new customers as compared to other service providers. Satisfaction level with Price or Call rates of Idea users is high. Idea is positioned among the user as a low price player. Idea attracts new customers on the basis of new attractive scheme or promotional offers, means on the basis of prices which is a poor way doing of business. The trends in developed countries show that the customers are demanding new and new Value Added Services. As 3G is about to reach India so these high quality value added services will no longer be out of reach of Indian Telecom companies. Mobile Blogging is a very good application that is catching up very fast. Mobile marketing can be a good revenue generator for the telecom companies. Mobile Learning can also become a good value added service because unlike e-learning, which is dominated by corporate buyers, mobile learning is being driven by consumer, government, and healthcare buyers. A variety of new and enhanced mlearning services cab be language learning, test prep, training podcasts, location-based services and handheld continuing education content.
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Idea needs to focus on its existing customer base because the churn rate in telecom industry is increasing at an alarming pace and the reason for it is the fierce competition. As Airtel is doing now, calling its ex-customers and asking for the reasons for leaving Airtel because it has realized the problem of churn. Idea should work on its connectivity; its connectivity is not up to the desired mark. it needs to keep coming with new attractive Value Added Services because the future of the mobile telephony lies in Value Added Services. Other thing Idea can do is to introduce attractive Value Added Service that are possible at this point of time. 3G is almost reached and Airtel is starting IP TV. So Idea can take this as an eye-opener. Idea can start applications like Mobile Magazine, Mobile Learning, Mobile Marketing, Mobile Social Networking, Mobile Blogging and Music Downloads etc. because these are very potential services which can generate huge revenues for the company.

Chapter 2 Introduction
Statement of Problem
The countrys mobile service providers have been adding a combined 6.5 million subscribers every month, making India the fastest growing telecom market in the world. But ARPUs (Average Revenue Per User) of Indian mobile companies, which are already the lowest in the world, is continuing to head further south, even as companies are registering a significant increase in their overall revenues. IDEAs ARPU fell 1.6 per cent to Rs 317 from Rs 322 a month a subscriber in the third quarter of 2006-07. However, compared with the corresponding quarter of 2005-07, the figure fell a worrisome 15.1 per cent. This decline has become a trend now; it has been declining continuously for past 3-4 years. So this is a cause of concern for the company. The ARPU (Average Revenue Per User) for the Indian Telecom Industry is continually falling. The call rates in India are lowest in the world and therefore there is a pressure on service providers to increase the ARPU because their profit margin is decreasing continually. So they need to introduce other services and find out other means to increase the revenue.

Explanation of the Problem

Every company needs to analyze the products that are major contributors of revenue and profits. While most manufacturing companies look for the contribution from each product segment, the service providing telecom companies search for the same nuance in the average revenue per user (ARPU), which is indicative of the revenues that these companies generate from each of its service offering like cellular mobile services, dialup or broadband services.
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Idea Cellular has seen a steady decline in its ARPUs on account of increased competitive pressures. A part of the fall in the ARPUs can also be attributed to the reduction in regulatory charges like the revision in interconnection usage charges, the reduction in access deficit charge (ADC) and also due to a shift in customer profile. The company has over the years witnessed a marked increase in its prepaid customers (as a percentage of total subscriber base), which has caused a reduction in its blended ARPUs. However a fast paced subscriber addition and an increase in the minutes of usage (MOU) per subscriber per month has led to an increase in the overall revenues of the company. As it is explained below: Idea Cellular: ARPU and MOU ARPU (Rs per subscriber per month) Prepaid Postpaid Blended MOU (per subscriber per month) Prepaid Postpaid Blended Service Revenue (Rs m) Source:Company Prospectus FY03 1330 426 727 414 103 207 9,403 FY04 1149 381 541 583 199 279 12,965 FY05 779 307 414 463 185 248 22,464 FY06 707 304 391 523 224 289 29,489 CAGR -19.0% -10.6% -18.7% 8.1% 29.6% 11.8% 46.4%

What is ARPU
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A cellular mobile service provider derives its revenues by way of tariff charges for outgoing calls made by subscribers on its network. As such, revenue for a cellular mobile service provider is simply a multiple of average revenue per subscriber per month (ARPU) and number of subscribers. Let us now understand what determines the ARPUs and subscriber base. Average revenue per subscriber per month, or ARPU, is the amount of money that a cellular mobile service provider generates per subscriber per month. It can be obtained by dividing the total wireless revenues by number of subscribers and then dividing the output by number of months in a period. To even out the volatility in ARPUs, if any, it is better to arrive at the figure by averaging the wireless revenues and subscriber base for the latest two years. However, considering the rapid pace of subscriber addition for Indian cellular mobile service providers, ARPU calculated as dividing the trailing 12-months wireless revenues by latest subscriber base. How are ARPUs calculated ARPU is calculated as service revenue (excluding activation charges and infrastructure sharing revenues) divided by the average number of subscribers for the relevant period. ARPUs can also be calculated as minutes of usage (MOU) per user per month multiplied by revenue per minute. In most cases, ARPUs are calculated for a month. Do MoU and ARPU grow or fall together Growth in MoU does not necessarily increase the ARPU. Most of such growth is due to reduction in cost per unit thereby encouraging usage but as the revenue per minute is lowered, the ARPU does not grow at the same pace. In fact it has been observed that ARPUs have been consistently falling in spite of double-digit growth in MOU. Importance of ARPUs

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Tariffs and minutes of usage drive the ARPUs. The tariffs are representative of the competitive pressure in the market, as increased competition will drive the tariffs down to their more competitive levels. In certain cases, tariffs may also fall on account of a reduction in the regulatory charges as levied by the regulatory body (TRAI in this case). The minutes of usage are indicative of the usage of the service by subscribers and in turn representative of the network utilization of telecom companies. Thus, the ARPUs are an important tool for analyzing the subscriber and devising strategies to maximize revenues through various tariff plans. The tariff plans are framed in such a way that they appear attractive to new customers and also incentives the existing prepaid customers to switch to postpaid tariff plans. This helps the company to maximize its reach with prepaid customers as also to convert prepaid customers to relatively higher revenue yielding postpaid customers. Lower ARPUs and margins Idea has a lower ARPU compared with Bharti Airtel and Hutchison Essar. Though it has a slightly higher ARPU than Reliance Communications', it takes a hit in its operating profit margin (OPM). Idea has a lower OPM at 33.6% compared with Reliance Communications and Bharti Airtel both of which have OPM of close to 40%. The lower ARPU can be attributed to the company's (a) lower market share; (b) absence in the lucrative Mumbai circle and (c) high share of pre-paid customers (88%). The margin is lower due to the lower ARPU and the launch of three new circles in the last year, which dragged down the OPM. Going forward, as the operations in the new circles stabilise in the medium term, the OPM would stabilise too.

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Chapter 3 Objective & Scope

Objectives
The summer internship done with Idea Cellular Objective was to find the ways of increasing the ARPU (Average Revenue Per User) for the company. The objective of the summer project was to understand the customer preferences while choosing a telecom service provider. Other main objective of the project was to study the trends in the International Telecom market.

Scope
The scope of the study was limited to Noida and Greater Noida region. This project was conducted for Idea Cellular Limited to assess the preferences of mobile users in India. The project is limited to direct observations from the data collected. Data collected with help of questionnaire was put in excel sheets. A survey of 400 Mobile users was conducted in Noida and Greater Noida. The sample has covered the mobile users of other service providers also as to understand the competition and their strength and weaknesses. The survey was limited mainly to the youth because they are the most significant part of the customer base and they are the trend setters. They are the customers where revenues come from. Scope of the project also includes the analysis of the strengths, weaknesses and opportunities that the company possesses and the various threats posed by the competitors like: Hutch and Airtel in the market. Scope of the survey includes identifying customer needs and services that they expect from a service provider so as to take measures to increase the average revenue per user and increase the market share of Idea.

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Chapter 4 Research Methodology

Collection of Primary Data A systematic approach was followed to fulfill the objectives of this study. First of all, the needs of the project were studied and on the basis of those needs a questionnaire was formed. The data was collected from the Idea customers as well as the customers of other service providers so that we could compare the services by Idea with its competitors. The objective of the questionnaire was to study the spending behavior of the telecom users, to study for how long they stick to a service provider, also to find out the customer priorities while buying the a new number. The research design chosen was Descriptive Research Design because the survey was conducted to get the customer insight and to know their preferences. Also it was to find out perception about the service provided by telecom companies. So mainly it was to describe the telecom market characteristics. I did random sampling while conducting the survey. The survey was conducted in Noida and Greater Noida region. A total of 400 telecom users were studied, and most of them belonged to the youth category because my main objective was to find out the spending habit of Indian youth. And the reason behind this was that its the youth who is revenue generator today. Collection of Secondary Data The secondary data was collected to understand the market trends and forecast in developed and developing countries. This data was mainly collected from the research
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companies sites on the basis of their market research. These trends then were analyzed whether these can be applied by Indian Telecom players.

Chapter 5 Description of Current Situation

Industry Growth Drivers
Overall economic growth and continued development of the Indian economy The buoyancy of the Indian economy has increased the purchasing power of consumers. Disposable incomes have risen by a CAGR of 10% over the last ten years, resulting in an increase in consumption expenditure. According to the National Center for Applied Economic Research (NCAER), the number of households in the middle income, high income and rich categories is expected to increase to approximately 37 million, 21 million and 23 million, respectively, by financial year 2007 from approximately 24 million, 14 million and 12 million, respectively. Increasing Affordability This significant improvement in affluence coupled with the growing working population is expected to be one of the key drivers for increased mobile telecommunication penetration in the future.

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Favorable Demographics in India The favorable demographic profile of India as reflected in the increase in the population in the age group 15-44 is a factor for the growth in the demand for telecommunications services since this age group is associated with a higher propensity to spend with increasing disposable income and with increasing trend awareness Higher growth rate of service-oriented sectors, leading to an increased demand for mobile telecommunications services The contribution of the service-oriented sectors to the Indian GDP has increased significantly in the past five decades. Service oriented sectors contributed approximately 29% of the GDP in 1960 and contributed approximately 54% of the GDP in 2005. This growth is primarily due to enhancements in information technology and information technology-enabled services in the last two decades. This should in turn lead to increased demand for mobile telecommunications services.
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Declining tariffs and reduced handset costs have enhanced subscriber growth Tariffs have been declining over the past ten years. Handset costs have also decreased significantly in recent years. This has reduced the entry barriers for new subscribers and thus expanded the markets available to telecommunications service providers. Fall in incremental capital expenditure per subscriber and economies of scale Mobile operators in the Indian telecommunications industry have generally attained the necessary number of subscribers to benefit from various economies of scale and to negotiate better prices from network equipment vendors. As a consequence, as well as because of significant subscriber growth, incremental capital expenditure per subscriber is expected to fall in the future. Increased regulatory clarity Regulatory changes and refinements in recent years have brought greater clarity to existing rules and procedures, which should enable operators to focus on improving network quality and providing telecommunications services to subscribers under a stable regulatory regime. This situation should also make it easier for companies operating in the telecommunications sector in India to raise finance and other funding on more attractive terms given the greater predictability of the operational environment. Since the regulatory framework is an evolving process within the industry, there remain certain issues such as 3G Spectrum allocations and number portability which require further clarity from the regulators.

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Increase in pre-paid subscribers through micro pre-paid and extended validity cards will be a driver for future growth The growth in this segment is primarily due to lower entry costs for subscribers and availability of products and services. From the perspective of a mobile operator, prepaid subscribers are logistically easier to manage than post-paid subscribers as they dont require elaborate sales infrastructure nor do they pose significant credit risks as payments are received upfront. The latest micro pre-paid plans and extended validity cards by mobile operators have proved popular and have taken subscriber growth to new levels. Increasing demand for value-added telecommunications services As the telecommunications needs of subscribers become increasingly sophisticated, it expect increased demand for value added data services such as music messaging and voice recognition products. This trend will be enhanced by the development and supply of new data-enabled handsets at lower prices. Revenues from VAS are expected to bridge the gap created by the fall in ARPUs triggered by a reduction in tariffs.

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Corporate Profile
Idea Cellular Limited is amongst the leading mobile operators and currently operates in 11 Circles which comprise one metropolitan Circle, three category A Circles, six category B Circles and one category C Circle. In addition, it holds licenses for the Metropolitan Circle of Mumbai and the category C Circle of Bihar. Its ranked amongst the top three operators in six of the Established Circles. It is currently one of the fastest growing mobile operators and has consistently grown in the Established Circles and New Circles with a market share of Net Adds of approximately 16.7% in the period between April and December 2006. It is an experienced and well-positioned GSM service provider with original licenses in seven of 13 Circles as a result of which it benefits from various incumbency advantages. It has a history of expanding, integrating and rebranding Circles, as it did with, for example, the Uttar Pradesh (West), Haryana and Kerala Circles. In November 2002 it commercially launched in the highly competitive Delhi Circle and has gained a market share of 11.5% as at December 31, 2006. It is well positioned to capitalize on the growth opportunities in the Indian telecommunications market and will be able to leverage its existing strengths in all 13 Circles and into additional Circles where it commence operations. It is now part of the Aditya Birla Group, which is sole promoter and is currently amongst the largest business groups in India in terms of market capitalization. Since
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November 2005, companies belonging to the Aditya Birla Group have been major shareholders and it has benefited from the Aditya Birla Groups strong and committed support. Since that time it has invested over Rs. 25 billion in expanding and rollingout network in the Established Circles and the New Circles. Following this investment, in the last nine months its subscriber numbers have grown significantly, increasing by approximately 68.9% to approximately 12.44 million subscribers as at December 31, 2006 from approximately 7.37 million as at March 31, 2006, and cellsites have increased to 8,600 as at December 31, 2006 from 4,763 as at March 31, 2006. As at December 31, 2006 its network covered 1,627 Census Towns and 1,980 other population centers. For the financial years 2005 and 2006, gross revenues were approximately Rs. 22.68 billion and Rs. 29.73 billion, respectively, and EBITDA was approximately Rs. 8.29 billion and Rs. 10.86 billion, respectively. Its growth to date has been the product of a combination of organic growth and acquisitions. It is expanding its coverage in the Established Circles and the New Circles, and also is pursuing new licenses to create a pan-India footprint. It has recently received License for the Mumbai Circle and, through Aditya Birla Telecom Limited, License for the Bihar Circle. The Mumbai Circle is attractive because Mumbai is the commercial capital of India and also because of the community of telephony interests including the benefit of traffic flows with other Circles, particularly Maharashtra, Delhi and Gujarat Circles. It has also recently obtained an NLD license which will reduce operating costs. In addition, it has nine License Applications pending for further Circles which, if obtained, will give complete access to the Indian market. The table below explains the market share of Idea in respective circles:

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Idea closes in on US$ 1 billion sales mark Idea Cellular is set to become a billion-dollar company. On the back of expanded operations and increased subscriber base, the 11-circle operator is expected to earn over Rs 4,300 crore in revenues during FY07. This will be a growth of almost 45% over the previous fiscals revenues of Rs 2,965 crore. According to industry analysts, the company is on track to touch the billiondollar mark as the number of users on its networks has almost doubled to over 14 million during the last financial year. Idea will be the sixth Indian operator to achieve the milestone after Bharti Airtel, BSNL, Hutchison Essar, Reliance Communications and Tata Teleservices. It expect to enjoy 45% CAGR in revenues and 47% CAGR in EBITDA, market research firm CLSA said in a note on Idea Cellular. It estimates the companys revenue for FY07 at Rs 4,310 crore and net profit at around Rs 420 crore. The rise in revenues was also due to operations in new circles of Rajasthan, Himachal Pradesh and Uttar Pradesh (East) within a span of two months. In these new circles, Idea has added over six lakh users in the past four-five months.
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Idea expects to close the fiscal 07-08 with nearly 25 million users, an analyst said. Ideas growth was stunted until June last year due to some differences between joint venture partners the Tatas and Birlas. However, after the Birlas bought out the Tatas, the companys revenues saw fast growth. In the nine months ended December 07, Idea earned Rs 3,000 crore in revenues and in the next three months, it made another Rs 1,500 crore. With rollouts in Bihar and Mumbai expected this year and incumbency advantage in some key circles like Delhi, Idea is poised to grow fast. Entry into newer circles and NLD operations will boost the topline in FY08, said another analyst. Pune-based Idea, which listed on bourses in March 07, is the sixth largest Telco in India. Largest player Bharti Airtel, which offers services in all the 23 circles, had reported revenues of $1.1 billion during the third quarter of FY07.

Products and Services

It offers pre-paid and post-paid mobile services in the Established Circles and the New Circles under the brand names of Idea Chit Chat and Idea, respectively. It seeks to identify new business opportunities and be the first mover amongst its competitors for value added services (VAS). It was the first mobile operator to offer an extended validity post-paid product, which now forms a sizeable percentage of its post-paid base. In addition to its core mobile voice services, it offer its subscribers features such as: 1. Easy to use missed call alerts; 2. GPRS enabled entertainment services like MMS, Video Tones, WAP, Wallpapers, Java Games and Mobile Magazine;
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3. GPRS enabled information services like internet browsing, data cards and mobile email; 4. Voice and SMS based entertainment services like Ring Back Tones, Background Music, Voice and SMS Chat, Ringtones, Horoscopes, Expert Advise and Subscription Services; 5. Call-forwarding (allowing a subscriber to divert incoming calls to another telephone number); 6. Call conferencing (allowing a subscriber to speak to two or more persons simultaneously); 7. Voice mail (allowing callers to leave voice messages for the subscriber); 8. Regional, on-net, national and international roaming options for the subscribers; 9. GPRS roaming available with key national and international operators; and 10. Fixed Cellular Terminal for corporate needs, GSM gateways, vehicle tracking; and Automatic Meter Reading.

Awards and Recognitions

It has received several awards and acknowledgements, including: 1. An award at the GSM Association Awards ceremony in Barcelona in February 2006 in the Best Billing or Customer Care Solution category for its Bill Flash service. Its the first, and remain the only GSM based service operator in India, to win an industry-wide, international GSM Association Award; 2. Being cited as one of the top 20 companies to watch out for in 2007 in Business Today. Business Today is one of Indias premier business news publication; and
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3. Winner of Golden Peacock Innovative Product/Service Award in Delhi Circle in 2002.

Growth Opportunities
1. Indian telecom market crossed 200 million telephone subscribers. 2. In the last two years 75 million new subscribers added. 3. About 5 million subscribers being added every month since Dec. 2005 4. Highest growth rate in the world, for the first time surpassing China 5. This growth has facilitated the expansion of BPO industry which employs 5 lakh people - 400 employees added per day 6. 45 MHz of additional spectrum from defence to be made available for growth of mobile services in the beginning of the year 2007 7. GSM spectrum between 15 MHz and 37 MHZ allotted in different service areas 8. CDMA spectrum between 2.5 MHz and 15 MHz allotted in different service areas 9. Nokia, LG, Ericsson have set up their manufacturing facilities in India 10. Motorola, Foxconn, Aspocomn etc., have also decided to set up their manufacturing base with an investment of about US$ 650 million 11. FDI of US$ 2 billion in telecom manufacturing by 2007 12. A center of excellence in telecom technology in Public Private Partnership (PPP) mode by 2007 13. Handset for Rs. 1,500 launched, expected to go further down to Rs. 1,000.

Growth Strategies
It believes that its well positioned to grow in the rapidly expanding Indian telecommunications industry. It believes its growth strategies have and will continue to enable it to:

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Build on its strong position in the Established Circles As at December 31, 2006, the footprint of its Established Circles alone covered approximately 46.6% of Indias subscriber base. It enjoys a strong market position, distribution strengths, brand recognition and the use of the 900 MHz band in seven of the eight Established Circles. This platform, now leveraged through increased investment in its network and its brand, has delivered growth in market share upon which it believe it can build to strengthen its position in its Established Circles. For its New Circles and the Bihar Circle, and for the licenses for which it have applied in category B and C Circles, mobile penetration as at December 31, 2006 is 7.7%, which is lower than the 14.5% in the Established Circles. This should mean that the entry barriers are less formidable and the market opportunities greater. Additionally, its strong position in its established Circles should provide it with advantages in contiguous Circles. For example, when it launched in the Uttar Pradesh (East) Circle it benefited from its strong market position in the neighboring Circles of Uttar Pradesh (west) and Madhya Pradesh. It therefore believes that its leading position in the Maharashtra Circle will work to its advantage in the intensely competitive Mumbai Circle. The DoT intends to release further Spectrum in the 900 MHz and 1800 MHz ranges to commercial mobile operators once the Indian defense services and other agencies vacate these ranges and it anticipate that this could happen in the next three to six months. The additional Spectrum should ensure that its not bandwidth constrained in any of its 13 Circles and thereby facilitate organic expansion. Although the opening up of additional Spectrum will also allow further competitors to enter its 13 Circles, it believe that its well positioned to face the increase in competitive pressures. It will evaluate 3G opportunities as and when they become available. Derive synergies and economies of scale from an expanding operation Since its incorporation in 2002, it has grown both organically and through acquisitions and takeovers. In January 2004, it operated in only 5 Circles whereas now it has
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operations in 11 of Indias 23 Circles and has recently received License for the Mumbai Circle and, through Aditya Birla Telecom Limited, License for the Bihar Circle. It believes that standardizing and centralizing its operations, wherever appropriate, will help eliminate duplication and improve operational efficiencies. It has, for example, standardized its approach to customer care. It has successfully centralized several applications; including Enterprise Resource Planning using Oracle Financials, interconnect billing using customized software, a call management system and a fraud management system. In order to improve network utilization and to optimize its capital and operating expenditures it also intend to: 1. Re-align key elements of capital expenditure towards optimal capacity utilization for a mass market strategy. For example, it ensures that its equipment vendors charges, which are based on number of subscribers, should only apply to subscribers actually using the network; 2. Take advantage of scale in procurement by: - aggregating multi-year procurement strategy for larger capital expenditure needs of its 13 Circles, which enables it to derive benefits from economies of scale with its vendors; and - delegating smaller-scale equipment acquisitions to its 13 Circles, thereby enhancing efficiency 3. Utilize the available frequency Spectrum more efficiently through a variety of frequency optimization techniques; 4. Continue to obtain bandwidth for capacity to carry calls from location to location within its network at substantial discounts from the benchmark rates specified by TRAI; and 5. Reduce the cost of operating a cell-site, for example by maximizing cell-site sharing, by using solar power for Base Transreceiver Station (BTS) sites and outdoor BTS to reduce power consumption. Build a meritocratic organization with a strong focus on people

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Its an equal opportunity employer and encourages diversity. The values it embraces integrity, commitment, passion, seamlessness and speed. It places emphasis on employee development and it has, for example, committed itself to an average of 10 days training per employee this financial year. As part of the Aditya Birla Group, it makes full use of the facilities of Gyanodaya, the Aditya Birla Groups renowned management institute located outside Mumbai, to ensure adequate training and team building. It regularly evaluates its employees engagement levels to help ensure that subscribers experiences exceed expectations.

It, and also the Aditya Birla Group, is seen as employers of choice. The Aditya Birla Group offers career opportunities to high performing talent across its locations worldwide, which contributes to its attractiveness as an employer. Focus on customer service to enhance brand appeal It places significant emphasis upon delivering an efficient and friendly experience at all contact points in the subscriber life cycle. Its tariffs are designed to be transparent and easy to understand. It has developed call centers to focus on its subscribers needs for service and to cross-sell its various products. It has consistently focused on innovative products that address existing and latent needs of its subscribers. For example, it has recently promoted a free one-year life insurance cover of Rs. 10,000 to a section of customers who subscribe to its Dialler Tone VAS. The simplicity of application for and the security provided by the cover matched the profile of the segment of customers to which it was targeted. At present, approximately 44% of its employees serve in customer-facing roles.

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Competitive Strengths
Competitive strengths are set out below: Operations in 11 Circles covering a large part of the Indian market As at December 31, 2006, the Established Circles and the New Circles covered 57.7% of Indias total population and about 57.9% of Indias current subscriber base. It have approximately 14.7% share of these subscribers as at December 31, 2006 although services in the three New Circles were only recently commercially launched. Andhra Pradesh, Gujarat and Maharashtra and the metropolitan Circle of Delhi, which are economically well-developed, each with average per capita state domestic products higher than the national average. These four Circles alone account for 30.4% of all mobile subscribers in India as at December 31, 2006. Market leader in three of, and established positions in the remainder of, the Established Circles. It is the market leader in the Haryana, Maharashtra and Uttar Pradesh (west) Circles by number of subscribers. As at December 31, 2006 it had over 0.75 million subscribers and a market share of 20.3% in the Haryana Circle, over 2.5 million subscribers and a market share of over 23.0% in the Maharashtra Circle and it had nearly 1.5 million subscribers and a market share of approximately 21.2% in the Uttar Pradesh (west) Circle. It believes its leading market position has helped it to develop strong brand recognition and a high profile among existing and potential subscribers. It believes this position also has allowed it to establish a strategy of developing a larger, more active pre-paid card distribution network than its competitors in these Circles.

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Original licensee in seven of the Established Circles providing incumbency advantages It is the original licensee in seven of the Established Circles, namely the category A Circles of Andhra Pradesh, Gujarat and Maharashtra and the category B Circles of Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (west). Although initially it paid higher fixed license fees, it believes that being an original licensee has enabled it to: - reduce its capital expenditure and operating costs as it were allocated Spectrum in the 900 MHz frequency band, which has allowed it to provide networks with a lower density of cell sites than is required for services in the 1800MHz frequency band typically made available to subsequent market entrants; - access the early subscribers, who tend to be more affluent and typically have higher ARPU; - cater to a critical mass of subscribers, thereby making it harder for new operators to enter the market and gain market share; and - benefit from the 2% reduction in its license fees for a period of four years with effect from April 1, 2004. A national brand It has sought to develop the Idea brand nationally to represent high quality customer service and a wide variety of innovative products. It believes its brand gives it a strong platform from which to market mobile services to new subscribers. As it emerges as a national player, it have begun associating itself with visible and prestigious events such as the International Indian Film Academy Awards, the Zee Fashion Awards and the Idea News Headlines to give its brand national visibility.

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Critical mass of 12.44 million subscribers It provides mobile services to approximately 12.44 million subscribers in the Established Circles and the New Circles, as at December 31, 2006. It believe this subscriber base enables it to realize significant benefits from economies of scale in many aspects of its operations, such as equipment procurement, sales and marketing, billing and customer service and support Strong distribution channels It has developed its distribution network to maximize the breadth and depth of its distribution channels and the consequent ease of access to its pre-paid, post-paid and corporate subscribers. As at December 31, 2006, approximately 88.0% of its subscribers were pre-paid. These subscribers pay for mobile services by means of purchasing pre-paid cards, which are sold through approximately 154,070 retail outlets. These retail outlets are serviced through approximately 1,355,115 exclusive distributors, many of whom have long-term relationships with it. The breadth of its distribution network has grown by over 30% in the past year. In addition it operate approximately 540 Idea n U and other showrooms which supplement its distribution channels and provide customer service. High quality network structure Its GSM network is supplied by leading equipment suppliers such as Ericsson, Nokia and Siemens who are at the forefront of GSM technology. In each of the Established Circles and the New Circles, it has maintained a high degree of integrity on the network architecture whereby elements of GSM equipment are largely supplied by a
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single vendor. For example, Ericsson is its principal supplier for the Gujarat, Himachal Pradesh, Madhya Pradesh, Maharashtra and Rajasthan Circles, Nokia is its principal supplier for its Andhra Pradesh, Delhi and Haryana Circles and Siemens is its principal supplier for the Kerala, Uttar Pradesh (East) and Uttar Pradesh (west) Circles. This architecture facilitates easy scalability and efficiency in operations into the future. It have adopted a distributed network architecture for its base station controllers (BSC) and switches in the Established Circles and the New Circles which has helped it build a reliable network whilst minimizing the transmission costs. It has deployed the highly developed Intelligent Network system from Ericsson and Nokia for its prepaid system and has integrated these with its Online Service Control system for online charging of roaming SMS, WAP, MMS and GPRS for prepaid subscribers. It has implemented GPRS across all the Established Circles and the New Circles with Enhanced Data Rates for Global Evolution (EDGE), which provides its subscribers with data transfer speeds superior to GPRS, activated in major towns across the Established Circles and the New Circles.

Part of the Aditya Birla Group Its a part of the Aditya Birla Group, which is amongst the largest business groups in India in terms of market capitalization. The Aditya Birla Group is well respected in India and it benefit from the confidence that consumers, lenders, vendors from whom it seek vendor financing and other financial institutions place in members of the Aditya Birla Group. Its relationship with the Aditya Birla Group provides scope for exploiting synergies to create value for its business. For example, it have entered into a strategic alliance with Birla Sun Life Insurance Company Limited, a private insurance company, in relation to the cross selling of products. Its a professionally managed company that requires the commitment and expertise of its employees to successfully execute its growth strategies. It believes the combination of its
31

management structure and supportive relationship with the Aditya Birla Group enables it to effectively manage a dynamic business and to respond quickly to rapidly changing market situations.

Risk Factors
It faces intense competition from other operators The competition in the Indian telecommunications industry is intense. It faces significant competition from companies that have a pan-India footprint such as Bharti Airtel Limited, Tata Teleservices Limited and Reliance Communications Ventures Limited. Competition may affect its subscriber growth and profitability by causing its subscriber base to decline and cause both a decrease in tariff rates and average revenue per user (ARPU) and an increase in Churn and selling and promotional expenses. It may be unable to manage its rapid growth Idea has experienced significant growth in recent periods. Its total number of subscribers has increased from 7.36 million as at March 31, 2006 to approximately 12.44 million as at December 31,2006. Based on statistics compiled by the Cellular Operators Association of India (COAI) it acquired a approximately 5.08 million subscribers in the last nine months, of which its records indicate approximately 97.0% were prepaid subscribers.

32

To meet anticipated growth in demand for mobile services it intends to increase the capacity of the Established Circles and to continue to roll-out network in the New Circles. It also plans to roll-out services in the Mumbai and Bihar Circles and to operate its NLD license. It is actively seeking further licenses and has filed the License Applications. There can be no assurance that it will be able to execute owes strategy on time and within budget or that it will retain its subscribers on its network, achieve the network quality, capacity or revenues or enroll the number of new subscribers that it have planned.

The Churn rate in its networks is high increasing its subscriber acquisition costs and resulting in the loss of future subscriber revenues Churn, or subscriber attrition, is an industry term used to refer to subscribers leaving a network. It calculate churn by dividing the total deactivations in a period by the average number of subscribers for that period and dividing the result by the number of months in the relevant period. Churn in mobile networks in India is high especially among pre-paid customers. Its average monthly Churn was 6.2%, 7.3% and 6.2% for financial years 2004, 2005 and 2006, respectively, comprising 6.7%, 8.2% and 6.4% of pre-paid subscribers, respectively, and 4.6%, 4.4% and 5.3% of post-paid subscribers, respectively. Its pre-paid subscribers accounted for approximately 75.7% and 81.8% of its total end of period (EOP) subscribers as at March 31, 2005 and 2006, respectively. Its revenues are derived solely from providing mobile services and its dependent on four of the Established Circles for a significant proportion of revenues

33

Its focused exclusively on providing mobile services, which constituted approximately 99.1% and 99.2% of its revenues during the financial years 2005 and 2006, respectively. Its future success depends, to a large extent, on the continued growth of the mobile market and there being no adverse regulatory, technological or other changes impacting the mobile industry, its ability to add new revenue streams profitably or its ability to offer complete telecommunications solutions to its subscribers. Further, it is substantially dependent on four of the Established Circles, namely the Andhra Pradesh, Delhi, Gujarat and Maharashtra Circles, for its revenues and continued growth. According to COAI, it had in aggregate approximately 2.42 million, 3.19 million and 4.61 million subscribers in these Circles as at March 31, 2004, 2005 and 2006, respectively, which represented approximately 88.8%, 62.9% and 62.6%, respectively, of Its total subscribers at those dates. Any changes in subscriber preferences or other related factors, such as increased competition in these Circles (which may come from new entrants as a result of license applications), could have a material adverse effect on its business, results of operations, financial condition and prospects. It had negative cash flows in the financial years 2002, 2003 and 2006. Any negative cash flows in the future could have an adverse effect on its results of operations It operates in a capital-intensive industry and has historically financed its capital expenditure requirements through a combination of cash generated from operations, the sale of equity interests and secured and unsecured borrowings. It made substantial investments to meet its capital expenditure requirements in financial years ended 2002, 2003 and 2006 and, in consequence, had negative cash flows of Rs. 126.23 million, Rs. 4.21 million and Rs. 227.97 million, respectively.

34

It faces competition from Government-owned companies such as BSNL and MTNL It competes with players like MTNL in the Delhi Circle and BSNL in its other Circles. MTNL and BSNL also are incumbent operators in certain of the Circles for which it has submitted License Applications. These telecommunications operators are state-owned enterprises and are controlled by the Government and thus enjoy certain advantages. For example, BSNL is not required to pay Entry Fees, giving it a significant competitive edge over other mobile operators. These companies also have interconnect benefits allowing, for example, MTNL to provide, as it has recently done, local call rates to its subscribers for calls between the metros of Mumbai and Delhi. Additionally, BSNL holds an NLD license. There can be no assurance that it will be able to compete successfully with the Government operators and, if the Government does not ensure a level playing field its business, results of operations, financial condition and prospects could be negatively impacted.

Its revenues from Roaming are dependent on its ability to enter into appropriate arrangements with other operators Currently all mobile operators offer Roaming services to both their pre-paid and postpaid subscribers. Until recently, Roaming was a sizeable source of revenue for mobile operators. The strategy deployed by integrated operators and those having a pan-India footprint is to encourage preferred domestic Roaming whereby the subscriber roams with the same operator even when outside his or her home network. Until it achieves a pan-India footprint it will not be able to provide such seamless Roaming services to
35

its subscribers (especially when compared to its major competitors) unless it continue to have appropriate arrangements with other operators.

Chapter 6
Latest Market Trends in Developed Countries

Video driving mobile infotainment growth

36

A new Juniper Research study forecasts mobile video across 3G networks as the driver galvanizing mobile sports, leisure and infotainment services uptake in the next five years, resulting in a market that will grow from a 2006 value of $4.2 billion to $9.5 billion by 2011. Juniper says Europe will account for 40 percent of those revenues, with the Asia Pacific market ringing up 33 percent and North America chipping in 18 percent; while the Asian market will generate the most sports and infotainment traffic over the period in question, higher European data prices will account for its larger share of the revenue pie. "Sports services are getting repeated boosts by high profile global and regional sporting events--2008 will be a significant year in market growth with UEFA EURO 2008 and the Beijing Olympics," Juniper analyst and report author Bruce Gibson said in a prepared statement. "However the need to acquire mobile sports rights is keeping sports service prices high and these services require high quality and timely content. On the other hand community applications with user-generated content have relatively low cost content acquisition and minimize much of the complexity of content acquisition and updating. We see growth opportunities in both market sectors for very different reasons."

On-demand is in demand for mobile content

A Compete, Inc. survey finds one in seven consumers in the market for a mobile phone consider mobile on-demand services such as news, sports and movies a key factor in their buying decision. On-demand content fans tend to buy more expensive phones, replace them more often and churn less than other wireless subscribers. They also are more open to mobile ads.

Live mobile TV about a year away

37

Disney Media Networks co-chairman Anne Sweeney said this week she anticipates the U.S. introduction of live mobile TV broadcasting within the next year to 18 months. "We're learning from Korea about a transition that will be happening in the rest of the world," Sweeney said, speculating live mobile TV service will reach U.S. shores "certainly within the next 12 to, on the outside, 24 months--more like 12 to 18." Disney, which owns ABC, has already licensed about 250 hours of primetime hits like "Lost" and "Desperate Housewives" to South Korean mobile operator TU Media, Sweeney added.

Mobile sports worth $3.8B by 2011

A new Jupiter Research report forecasts mobile sports and information services will grow from a little more than $1 billion in 2006 to $3.8 billion in 2011, an average annual growth rate of 27 percent. According to Jupiter, the primary market catalysts will be the increasing availability of 3G services, the globalization of sports personalities and team support and improved digital sports rights management for mobile distribution. "This will only happen if everyone in the value chain pays attention to detail," Jupiter research director Bruce Gibson said in a prepared statement. "End-user experience in some markets of mobile sports content services built around the 2006 FIFA World Cup has not been consistently good. Many new users of sports services have been disappointed with the quality of the deliverable and may never buy again. First impressions count for a lot and particularly with time sensitive content like goal alerts and replays, the first experience has to be good to generate repeat business."

38

MySpace Mobile leads social networking pack

A new study issued by mobile media market research firm Telephia reports MySpace is the most popular social networking site among mobile subscribers in the U.S. and the U.K. According to Telephia, 32 percent of American mobile social networkers-defined in the study as users who upload content captured via wireless handset--cited MySpace as their favorite service, followed by Facebook at 13 percent and Windows Live Spaces at 11 percent. In Britain, MySpace Mobile is the favorite among 21 percent of the social networking population, followed by Windows Live Spaces at 11 percent. Telephia adds that mobile social networkers are generally much younger than the average mobile subscriber--69 percent of all 15- to 17-year-olds surveyed shared photos, videos and other personal content on MySpace sites.

Mobile music to $32B by 2010

A new Gartner report anticipates global spending on mobile music to reach $32.2 billion by 2010, more than double the $13.7 billion revenues expected for 2007. Consumers in the Asia-Pacific region and Japan are expected to lead the market, which will encompass everything from ringtones to full-track downloads. According to Gartner, mobile handsets will supersede dedicated MP3 players as consumers' music device of choice, although digital storefronts like Apple's iTunes and Microsoft's Zune Marketplace will force wireless operators to develop new content strategies and address nagging technical issues including DRM and network coverage.

Mobile content and services $150B by 2011

A new report issued by Informa Telecoms & Media anticipates dramatic growth for the mobile content and services market despite declining ARPU numbers for carriers. According to Informa, SMS and related messaging applications will still account for
39

more than half of projected mobile data revenues by 2011, generating $93 billion globally--while multimedia services including music, games, TV and adult content will grow to about $38 billion, user-generated content will blossom into a $13 billion market. "We may not be buying as many games, full-track downloads or multimedia messages as operators would like, but we are spending a huge amount of time sending and reading text messages and organizing our lives using the phone's address book, clock, alarm and calendar functions," Informa senior analyst Daniel Winterbottom said in a prepared statement. "Over time, users will warm to other data services as well. The mobile web is a prime example: WAP failed to take off when it was first launched, but five years on, more and more users have become comfortable with accessing news or other information on their mobile phones."

Mobile marketing $2.9B by 2011

Jupiter Research predicts the global mobile spending on mobile messaging and display advertising will grow from $1.4 billion today to $2.9 billion by 2011. About 22 percent of advertisers today engage in mobile marketing in some form, the group says, and a "substantial number" plan to begin doing so in the next 12 months.

More to mobile marketing than ads

According to a new report from Datacomm Research, mobile advertising is just one element of a successful mobile marketing campaign. Other necessary components must include promotion, sales and customer service. "Inundating mobile subscribers with sales pitches won't be effective," says author Ira Brodsky. "Successful merchants will leverage mobile phone technology to create deeper and longer-lasting customer relationships."

40

Kids want more from mobile music services

According to a new study issued by research firm Wireless World Forum, mobile companies must expand their existing music services in order to placate the everdesirable and chronically-dissatisfied youth market. MP3 playback alone isn't enough, the report says--music download services must also include tools to easily explore, capture, display and share content. "It's a social thing," Wireless World Forum analyst Jan Kuczynski said in a prepared statement. "In the past teenagers have made compilation tapes for their friends and swapped CDs. Music services can use the mobile too and, if implemented correctly, sharing can be an effective marketing tool."

Mobile learning market to reach $1.5B by 2011

A new report issued by research firm Ambient Insight forecasts the market for mobile learning products and services will exceed $1.5 billion by 2011. Ambient Insight credits a variety of new and enhanced m-learning services for the spike, including language learning, test prep, training podcasts, location-based services and handheld continuing education content. "Unlike e-learning, which is dominated by corporate buyers, mobile learning is being driven by consumer, government, and healthcare buyers," Ambient Insight chief research officer Sam Adkins said in a prepared statement. "The fastest growing opportunity over the next five years is the demand for custom content development and technology services. The largest buyers for these mlearning services in terms of revenues are corporations and government agencies."

41

An additional new Ambient Insight report anticipates growing demand for m-learning tools within the healthcare sector. Ambient says healthcare buyers are already spending over $96 million annually on mobile products including clinical applications, medcasts, CME exams, licensing exam preparation and medical reference, and anticipates spending will roughly triple to $276 million by 2011.

Content key to Asian mobile market

According to a Frost & Sullivan report, mobile data services represent the bulk of future growth for the Asian mobile industry. No surprise there really, but the report does call out premium multimedia content in particular, not just messaging revenues. The Asian market was $9.4 billion in 2005, and is expected to grow to $32.9 billion by the end of 2011. In that same timeframe, data is expected to grow at a compound annual growth rate of 17.9 percent. Premium content, which in 2005 represented 29.5 percent of total data revenues, will grow at a CAGR of 23.2 percent in the same time period, the analyst group says.

Mini-magazines for mobiles

Tocmag, a free mobile service that enables users to create six-page virtual magazines comprising text, photos, audio and video, launched today in the U.K. Developed by Swedish firm Three O'Clock Mobile, Tocmag already reports users in more than 20 countries, thanks to the 10,872 issues created during beta testing. According to the official press release, "trend spotters are calling Tocmag 'the mobile MySpace'"--the release fails to reveal just who these arbiters of cool might be, however.

Mobile blogging a niche appication

42

ABI Reasearch says the practice of mobile blogging may receive a lot of hype, but in reality is only a niche application. Analysts at the company expects only 655,000 active mobloggers by the and of the year, growing to only 2.7 million by 2011 (out of a base of 3 billion mobile subscribers worldwide). Hurdles include the still-poor picture quality of cameraphones, and the lack of interesting things to post by people with boring lives. The exception--moblogs tied to larger online communities.

Chapter 7 Findings & Analysis

1. Reason for Choosing The survey reveals that the main reason for choosing Idea is New Good Scheme; more than 50% Idea user who responded the survey were attracted to buy Idea Cellular because of its New Good Scheme. Other main reason for choosing Idea was Call Rates of Idea Cellular. But if we see the General trend, people choose any mobile service mainly because of its better connectivity. Reason for Choosing Idea

3% 3%

9% 0%

51%

34%

Attractive Number Call Rates

Better Connectivity New Good Scheme

Brand Name Value Added Services

43

Reason for Choosing any Service Provider 3% 5% 27%

25%

5% 25%

10%

Attractive Number Better Connectivity Brand Name Call Rates Good Customer Service New Good Scheme Value Added Services 2. Duration of Usage The duration of usage shows the loyalty towards a brand. Here according to the survey, only around 50% of the Idea customers are using Idea for more than 6 months but if we see the general trend, the people using a telecom service providers service for more than 6 months is 60%. So there is less customer retention in case of Idea Cellular as compared to other users.

Duration of Usage of Idea

40%

33%

12%

15%

Less than 3 Months 3-6 Months 6-12 Months More than 1 Year
44

Duration of Usage by any Mobile User

32% 47%

13%

8%

Less than 3 Months 3-6 Months 6-12 Months More than 1 Year

45

3. Monthly Bill Monthly bill for Idea cellular is almost similar to the other service providers but if we see it closely the portion of user spending more than Rs.800 is lesser than the Industry average.

Monthly Bill for Idea 6% 23%

20%

51% Below Rs.300 Rs. 300-500 Rs. 500-800 Above Rs.800

Monthly Bill for any Mobile User 9% 19%

24%

48% Below Rs. 300 Rs. 300-500 Rs. 500-800 Above Rs.800

46

47

4. Attention to VAS messages There is a positive sign that 30% of the Idea users pay attention to the VAS messages sent by the company whereas only 20% of the mobile users pay attention generally to these messages. So its a positive sign because until they know about the VAS, they will not buy that service.

Pay Attention to VAS Messages by Idea Users

30%

70%

Yes

No

Attention Paid to VAS Messages by any User

21%

79%

Yes No

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49

5. VAS Used According to the survey 55% of the mobile users do not use VAS but this figure is alarming high for Idea Cellular i.e. 70%. Main VAS used by Idea customers is dialer tones and ring tones. And same is the case for the whole telecom industry. So it needs to introduce new attractive VAS and make people know about them.

VAS Used by Idea Users 12%

6% 3% 9%

70%

Dialer Tones GPRS Picture Messages Ringtones None

VAS Used Generally 2% 1% 12% 10% 55% 1% 4% 15% Dialer Tones Picture Messages

Background Tones Contests GPRS Mobile Mail Ringtones None

50

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6. Amount spent on VAS The survey shows that only 27% of the Idea users spend more than Rs.15 per month and rest of them are spending either nothing or less than Rs.15. And the general trend is not quite different; generally around 33% of the user spends more than Rs.15. So the average revenue for Idea from VAS is lower than the Industry average.

Amount Spent on VAS by Idea User 9% 15% 3%

73%

Below Rs. 15 Rs. 15-40 Rs. 40-80 Above Rs. 80

Amount Spent on VAS by any Mobile User 8% 22% 3%

67%

Below Rs. 15 Rs. 15-40 Rs. 40-80 Above Rs. 80

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7. Satisfaction Level with Price The survey result shows that around 24% of the Idea users are not satisfied with the price charged by the Idea cellular. 37% of the Idea users are neutral. But if we compare it with Airtel only 17% users are dissatisfied. And satisfied portion is around 40% whereas Airtel has around 50% of satisfied customers.

Satisfaction Level with Price (Idea) 12% 3%

21%

27% 37%

Strongly Dissatisfied Dissatisfied Neutral Satisfied Strongly Satisfied

Satisfaction Level with Price (Airtel) 10% 5%

12%

40%

33%

Strongly Dissatisfied Dissatisfied Neutral Satisfied Strongly Satisfied

53

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8. Satisfaction Level with Connectivity Connectivity for Idea Cellular is not considered to be very good, but on this front Idea has improved. But if we compare it with Airtel, its far behind. Idea has 61% users satisfied whereas Airtel has 88% satisfied customers.

Satisfaction Level with Connectivity (Idea) 15% 3%

15%

21% 46%

Very Poor Poor Neutral Good Very Good

Satisfaction Level with Connectivity (Airtel) 0% 33% 12%

55%

Very Poor Poor Neutral Good Very Good

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9. Satisfaction Level with VAS The survey shows that there is a major portion who is not bothered about the VAS and that portion is neutral. 58% of the Idea users are neutral about the VAS as compared to 48% of Airtel users. Here 9% of the Idea cellular users are dissatisfied as compared to 13% of the Airtel users.

Satisfaction Level with VAS (Idea) 6% 0% 27% 9%

58%

Strongly Disagree Disagree Neutral Agree Strongly Agree

56

Satisfaction Level with VAS (Airtel) 5% 34% 2% 11%

48%

Strongly Disagree Disagree Neutral Agree Strongly Agree

57

10. Customer Care Services 58% of the Idea customers are satisfied as compared to 64% of Airtel. Also 15% of the Idea customers are not satisfied as compared to 12% of the Airtel. Both of these have almost equal portion of neutral customers.

Customer Care Service Idea 6% 3%

12%

52%

27%

Very Poor Poor Neutral Good Very Good

Customer Care Service Airtel 12% 5%

7% 24%

52%

Very Poor Poor Neutral Good Very Good

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11. Brand Name Idea is not considered to be a big brand name as compared to Airtel. Only 29% of the Idea users consider it a better brand name while 74% of Airtel users consider Airtel a better Brand name. Also only 2% of Airtel users think that Airtel is not a better brand whereas 12% of the Idea users consider Idea it a poor brand.

Brand Idea

6% 23%

6% 23%

42% Very Poor Poor Neutral Good Very Good

Brand Airtel

21%

0% 2%

24%

53% Very Poor Poor Neutral Good Very Good

59

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12. Attractive New Good Scheme Idea is famous for giving new schemes. 61% of the Idea users say that Idea gives attractive new schemes as compared to Airtels 41%. Only 3% of the Idea users do not agree to this statement as compared to 15% of Airtel users. So idea is far ahead in giving new attractive schemes.

Idea Gives Attractive New Schemes

15%

0% 3% 36%

46%

Strongly Disagree Disagree Neutral Agree Strongly Agree

Airtel Gives Attractive New Schemes

5% 36%

5%

10%

44%

Strongly Disagree Disagree Neutral Agree Strongly Agree

61

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13. Promotional Offer According to the survey 65% of the Idea users believe that Ideas promotional are good as compared to 54% of Airtel user think that its promotional offer are good. 29% of the Idea users are neutral as compared to Airtels 39%.

Promotional Offer by Idea

15%

3% 3% 29%

50%

Very Poor Poor Neutral Good Very Good

Promotional Offer by Airtel 7% 2% 5%

47%

39%

Very Poor Poor Neutral Good Very Good

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Comparison among Various Players

Here this graph shows the result of survey of different players on different parameters. The parameters taken are Connectivity, Customer Care Service, Brand Name, VAS, Attractive New Scheme, Promotional and Price.

C o m p a r is o n A m o n g V a r io u s P la y e
4 .3 4 .1 3 .9 3 .7 3 .5 3 .3 3 .1 2 .9 2 .7 2 .5 VAS Attractive New Scheme Promotional Offer Customer Care Service Brand Nmae Price

A ir te l H u tc h Id e a R e lia n c e

Connectivity

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If we compare these services providers on different parameters then Airtel is far at height in terms of connectivity followed by Hutch, Idea and Reliance. Idea is at the lower end in terms of connectivity followed by just only Reliance. In case of customer care services Airtel is on top followed by Hutch, Idea and Reliance. Reliance customer care service is considered to be the poorest among the four players. Idea has almost equal quality of customer care service. Airtel and Hutch are on the Heights of the Branding as compared to Idea and Reliance. Idea is quite low as compared to Hutch and Airtel on the branding. And Reliance is at the lowest end of customer care service. In terms of VAS, there isnt much difference among the service providers. All of them are almost on the same line but Idea is a little ahead. If we take Giving Attractive New Schemes parameters then Idea is on the top of all. Hutch is on the 2nd spot followed by Airtel and Reliance is at the lowest level. Also in case of Promotional offers, Idea is leading the league followed by Reliance and then Airtel and Hutch at the lowest place. If we compare these on the basis of price, Reliance is having the lowest prices followed by Idea Cellular. Idea is having lower rates than its GSM competitors i.e. Airtel and Hutch.

65

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Chapter 8 Conclusions
The reasearch shows that the Idea Cellular Ltd. has a low image among its own customers. They are not fully satisfied with the service they are getting and customer satisfaction is the base for any company to survive. The main reason for choosing a service provider is connectivity and Idea is not meeting the expectations of the customers on this front. Idea is not able to retain its customers as compared to other service providers. The churn rate for Idea Cellular is high and it has maximum of new customers as compared to other service providers. And its a satisfied old customer who spends more money than a new one. Monthly spending by Idea users is less than the other players. The future of the mobile companies lies in Value Added Services, these services will be the revenue generator in the future. Idea customers pay more attention to Value Added Service related messages than other customers. Unless a customer know about something how can he use it. Survey shows that the customer portion that doesnt use any VAS for Idea is very large. The main VAS used by Idea as well as generally are Dialer tones and Ringtones. The money spent on VAS by Idea customers is lower than the general customers. Satisfaction level with Price or Call rates of Idea users is high. Idea is positioned among the user as a low price player and hence Idea is trying to penetrate the customer base with lower prices. But even when its prices are lower than others customers are not happy with it as compared to Airtel whose prices are higher and customer are happy for the prices. The reason is that Airtel provides the value for money, it provides connectivity whereas Idea has poor connectivity.
67

Idea attracts new customers on the basis of new attractive scheme or promotional offers, means on the basis of prices which is a poor way doing of business. In terms of customer care service also Airtel and Hutch are above Idea. Idea is also not a big Brand name as compared to others like Airtel and Hutch. So these things like connectivity, customer care service and brand name stand for quality. And the company which lacks these fields is considered poor. The trends in developed countries show that the customers are demanding new and new Value Added Services. As 3G is about to reach India so these high quality value added services will no longer be out of reach of Indian Telecom companies. Mobile sports is going to be a big start in Asia with Beijing Olympics. Mobile Blogging is a very good application that is catching up very fast. Another trend that is catching up is Mobile Magazine. In developed countries some magazine publishers have begun offering mini-versions of their content via mobile phones. Mobile marketing can be a good revenue generator for the telecom companies. It can be one of the major revenue generator among value added services. And good news is that people are more open to mobile ads. Successful will leverage mobile phone technology to create deeper and longer-lasting customer relationship. Mobile Learning can become a good value added service because unlike e-learning, which is dominated by corporate buyers, mobile learning is being driven by consumer, government, and healthcare buyers. A variety of new and enhanced mlearning services cab be language learning, test prep, training podcasts, location-based services and handheld continuing education content. Healthcare buyers are already taking the benefits of m-learning in Europe. But all these services can be delivered when a company retain its customers and biggest loophole in retaining customer for Idea is its network. And network is the foremost thing that customer wants.
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Chapter 9 Recommendations

First of all what Idea need to do is to improve its image among its own customers. Its churn rate is high so it needs to retain its existing customers along with acquiring new customers because its old customer who brings revenue for the company. So Idea needs to focus on its existing customer base because the churn rate in telecom industry is increasing at an alarming pace and the reason for it is the fierce competition. As Airtel is doing now, calling its ex-customers and asking for the reasons for leaving Airtel because it has realized the problem of churn. So Idea also need to focus on this thing.

Idea should work on its connectivity; its connectivity is not up to the desired mark. Its the connectivity of the service provider that decides the quality. Idea also needs to improve the customer care service. Idea is able to start new VAS in the past but presently few customers use these VAS. So it needs to keep coming with new attractive Value Added Services. And the reason for that is the future of the mobile telephony that lies in Value Added Services. They will bring the revenues for the telecom companies

Other thing Idea can do is to introduce attractive Value Added Service that are possible at this point of time. 3G is almost reached and Airtel is starting IP TV. So Idea can take this as an eye-opener. Idea can start applications like Mobile Magazine,
69

Mobile Learning, Mobile Marketing, Mobile Social Networking, Mobile Blogging and Music Downloads etc. because these are very potential services which can generate huge revenues for the company.

Chapter 10 Limitations
My study had certain limitations which are explained below: 1. As I was doing my summer training at DST ( Distribution & Sales Terminal ) so I had no details of customers that company have at the Corporate office. 2. The sample for the survey covered subscribers from NCR only. 3. The time for the research was limited. 4. The result is limited to the reliability of method of investigations, measurement and analysis of data. 5. People were not interested in filling questionnaire properly. 6. It is very small research, which may be insufficient to give the real picture.

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References
www.fiercemobilecontent.com/channels/trends_metrics www.equitymaster.com/ideacellular www.moneycontrol.com/india/newsarticle www.ideacellular.com www.ibef.org/industry/telecommunications www.indiatelecom.org

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Appendix-1
Questionnaire
PART A NAME _______________________________________ AGE (a) 10-25 (b) 26-40 (c) 41 and above SEX (a) Male (b) Female INCOME (a) Up to 2 lakhs (b) 2-5 lakhs (c) 5 lakhs and above (d) N.A. PROFESSION (a) Service (b) Business (c) Student (d) Any other PART B 1) Which companys telecom service you are using? a) Airtel b) Hutch c) Idea d) Reliance e) Tata Indicom Other___ 2) How long you have been using it? a) Less than 3 months b) 3-6 months year c) 6-12 months d)

f) Any

More than 1

3) What was the reason of choosing your present service provider? a) Better Connectivity b) New Good Scheme c) Attractive Number d) Brand Name e) Good Customer Service f) Call Rates g) Value Added Services 4) How much is your monthly mobile bill? a) Less than Rs. 300 b) Rs. 300-500 c) Rs. 500-800
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d) More than Rs. 800

5) Do you pay attention to messages for Value Added Services like ringtones, background tones, dialer tones, contests, picture messages etc.? a) Yes b) No 6) Which Value Added Services you generally use? a) Ringtones b) Dialer tones c) Background tones d) Contests e) Picture messages f) Mobile mail g) GPRS h) None 7) How much you spend on Value Added Services per month a) Less than Rs. 15 b) Rs. 15-40 c) Rs. 40-80 d) More than Rs. 80 8) An overall service offered by service provider justifies the price charged by it. a) Strongly Agree b) Agree c) Neutral d) Disagree e) Strongly Disagree 9) The connectivity is very good a) Strongly Agree b) Agree 10) Call rates are reasonable a) Strongly Agree b) Agree 11) Customer care service is good a) Strongly Agree b) Agree 12) It is a better brand than others a) Strongly Agree b) Agree 13) It gives better schemes a) Strongly Agree b) Agree c) Neutral c) Neutral c) Neutral c) Neutral c) Neutral d) Disagree d) Disagree d) Disagree d) Disagree d) Disagree d) Disagree e) Strongly Disagree e) Strongly Disagree e) Strongly Disagree e) Strongly Disagree e) Strongly Disagree e) Strongly Disagree

14) Value Added Services are good a) Strongly Agree b) Agree c) Neutral

15) How would you rank the promotional offering by the company? a) Very Good b) Good c) Average d) Poor e) Very Poor PART C Mark the following on scale of 1-7: Very Good=7, Very Poor=1 I. Tangibles: The physical facilities at servicing outlets are visually appealing and organized (well maintained reception area, computerized billing) ____ The payment counters are enough at outlets. ____ II. Reliability :
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Provide their services at time they promise to do so. ____ If a customer has a problem, shows a sincere interest in solving it. ____

III. Responsiveness: Personnel give prompt services to customers. ____ Any queries at any point of day convenient to customer. ____ IV. Assurance Personnel at servicing outlets are courteous with customers ____ Have knowledge to answer customers questions. ____ V. Empathy: Give individual attention and understand specific needs ____ It keeps customers informed about services and schemes offered ____

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