Gurashish Singh (15057)

BMS 3FA

Idea Cellular
Company Overview

Idea cellular is the third largest mobile telecommunications operator in the

country, with Pan India operations offering Voice, Broadband Data, Value Added
Services , Digital Content and Mobile Banking Services. The Revenue Market Share
for your Company stands at 18.7% for the quarter ended December 2016. As of
February, 2017, the subscriber base of your company stands at 196.1 Mn, with
subscriber market share of 19.4%

Idea Cellular started its journey in 1995 as Birla Communications Limited

with GSM licenses in Gujarat and Maharashtra circles.In 1996 it changed name to
Birla AT&T Communications Limited following joint venture between Grasim
Industries and AT&T Corporation. In 2001 it changed name to Birla Tata AT&T as a
joint venture between Aditya Birla Group, Tata Group and AT&T Wireless. The
company named its brand Idea in 2002..

On a consolidated basis, the total revenues stood at 358,827 Mn, a decline

of 0.8% over the previous year. The EBITDA at 105,832 Mn reflects decrease of
13.1% as compared to the previous year. The consolidated Net Loss stood at
3,997 Mn, as compared to the consolidated Net Profit of 27,281 Mn for the
previous year.

As on February 28, 2017, the reported subscriber base of your Company

was 193.3 Mn, an increase of 18.6 Mn subscribers representing a growth of 10.7%
over last 12 month period. The VLR subscriber base of your Company grew by
7.5% during same period and stands at 196.1 Mn representing market share of
19.4% as on February 28, 2017. Percentage of active subscriber base to total
subscriber base for your Company stands at 101.4%. With over 198 Mn
subscribers in March, 2017, the Company opens multiple vistas for growth in
Broadband, Digital Content and Payment Services etc.
 Porter’s 5 Forces Framework Analysis

Threat from Substitutes

 Threat of Internet Telephony
 New Apps like Wynk , Jio Music
attracting more customers.

Bargaining Power of Suppliers (H) Threat of Competitive Rivalry (High) Bargaining Power of Customers(H)

 Some of the telecom
companies also have some
collaboration with major
handset manufacturers
like Samsung , Apple
 High Cost of Switching
Suppliers
 There are around 6 to 7 players in
the market which are leading to an
immense competition
 Airtel and Vodafone market shares
are at the top with 24.85% and
18.20% respectively
 BSNL has taken full advantage of
its fixed line subscriber base while
Airtel has dominated the scene
with wide reach and firm customer
base.
 Customers use multiple
mobile services these days
and hence have a good
knowledge.
 Customers are price
sensitive
 Switching to an alternative
product is relatively simple

Threat of New Entrants

 Reliance Jio effect: Idea Cellular

loses 6.4 million mobile data
customers in Q4 of 2017
 SWOT Analysis

1. Strengths

 Variety of Services: Idea Cellular offers a wide variety of services

over such as digital communication, online entertainment, digital
payments, Games, Movies, music, and cloud-based services.

 Wide network: Idea has a network that spans across India and is
there in 40,000 towns across the country. The idea is also credited
with the fastest 4G network in India close to 230,000 sites and a fiber
optic cable covering close to 1.28 lakh kms.

 Prompt Service: Idea Cellular is credited with the provision of great

after sales services through its outlets which number to 8780, call
centers with round the clock help desk number, service app, and social
media presence. The brand is at number 1 in a survey taken
on Customer satisfaction.

 Merger with Vodafone : Merger of Idea with Vodafone in India

would ensure larger customer base and more business and will create
the largest telecom company in India by subscribers and by revenue
2. Weaknesses

 Weaker 4G: In comparison to the Airtel, Idea Cellular indicates

slower 4G speeds and more Complaints about internet speeds. With
increased usage of smartphones, this can turn out to be a big
weakness.

 Poor rural access: Idea Cellular is more focused on urban

markets and cities and customer complain that the speed is painfully
slow in rural regions. This gives many competitors an upper hand in
rural areas.

 Pricing: The competition in the telecom service market is on a steep

incline and the only way to penetrate the market through the lowest
pricing. However, the company is finding it extremely challenging to
undercut the prices of its competitors.
3. Opportunities

 Growth in technology: The technology changes are creating new

opportunities in domains like VoIP and cloud-based communication
services. These may be used as value added services for telecom
service providers for which they can charge a premium.

 4 G networks: Most of the telecom service providers in India are

now into 4G which means that the internet speeds will see an ever
before impact in more aspects of life. Moreover, the internet is being
made cheaper and accessible to everyone and this increases the
probability of an increase in demand for phones.

4. Threats

 Competition: There is neck to neck competition in the telecom

sector from players like Airtel, Jio, and Vodafone.

 New Entrants: New entrant's low price offering can reduce profits
of Idea cellular
Value Chain Analysis

Primary activities:
Inputs

 Software and support services setup

 Value added content like Idea music lounge, Idea movie club etc.
 Finance for operations and setup of Infrastructure

Operations

 Restructuring and expanding Infrastructure

 Economies of scale

Output

 Broadband
 Wireless
 4G 3G services

Marketing and Sales

 Attractive Plans
 Celebrities endorsing the brand
 Ads and Promotional Activities
 Sponsored various sports initiatives

Services

 Customer support services

 Large no. of outlets
Support Activities:
Human Resource Management

 New and skilled hiring

 Training programmes

Infrastructure

 Tower setups
 IT infra setup
 Optical Fiber network setup

Technology Development

 R&D investment
 Vast 4G network
 New Softwares and Applications

References:
https://www.ideacellular.com/wps/wcm/connect/6009a9e8-4288-477b-83de-
4a98500d6b44/Idea+Cellular+Annual+Report_2016-
17.pdf?MOD=AJPERES&CACHEID=6009a9e8-4288-477b-83de-4a98500d6b44

https://telecom.economictimes.indiatimes.com/news/reliance-jio-effect-idea-cellular-
loses-6-4-million-mobile-data-customers-in-q4/58657756

http://Wikipedia.com