Mumbai: It was meant to be the idea that took Mumbai by storm, but three weeks after its launch in India’s commercial capital and the second largest market in the country for mobile phone services, Idea Cellular Ltd doesn’t seem to have made much headway.
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According to data released by industry lobby Cellular Operators Association of India, or COAI, the firm, which laun-ched its services in Mumbai on 20 August, ended the month with 17,000 subscribers.
The chief executive of a rival telecom company and a senior executive with another rival telco had independently said that Idea is finding the going slow in Mumbai.
Mint couldn’t independently ascertain the number of subscribers Idea has added since 31 August.
Soon after the Mumbai launch, a report from a foreign brokerage, which did not want to be identified, said: “Idea aims to have 0.8 million subscribers in Mumbai over next 12 months and expects around 20% share of net add(ition)s in the circle.” If Idea has to achieve this target, it will have to add 66,666 subscribers on average every month for a year.
Sanjeev Aga, managing director, Idea Cellular, declined to discuss the firm’s Mumbai debut with Mint, and would only say: “Don’t forget, Idea Cellular is the fastest growing telecom firm in the country.” Idea’s Mumbai network has the capacity to handle 1.5 million subscribers.
To be sure, Idea has added an average of one million subscribers across India every month this year. At 291 million phones for a population of 1.1 billion, India has a teledensity of 25.6%. Meanwhile, the hotly contested Mumbai market has a teledensity of 81%.
Failing to connect: An Idea Cellular ad at Mumbai’s Churchgate station. Some experts say the firm’s ads couldn’t strike a chord with consumers. Ashesh Shah / Mint
In terms of numbers, with 13.3 million mobile phone connections, Mumbai is just behind India’s capital New Delhi, which has 17.7 million connections.
Four other telecom companies, Datacom Solutions, Shyam Telelink Ltd, Swan Telecom Pvt. Ltd and Unitech Ltd, have received approval from the Department of Telecommunications or DoT to launch mobile phone services in Mumbai. None of them currently has the spectrum, or airwaves, to launch offerings.
Idea’s seemingly slow start may also have to do with an advertising campaign that some media experts say couldn’t strike a chord with consumers. According to an estimate by Shashi Sinha, chief executive, Lodestar Universal, a media planning and buying agency, Idea Cellular would have spent up to Rs12 crore on its Mumbai campaign.
The campaign, jiska number Mumbai ka, woh Mumbai ka, (he who has a Mumbai number is of Mumbai) was very visible. But Idea has to give potential subscribers a good reason to move to their network, said K.V. Sridhar, national creative director, Leo Burnett India Pvt. Ltd.
“To build a brand and a good product takes time as Mumbai is a different market and is not like Maharashtra or Goa,” he said.
Sheriar Irani, co-head of research, at investment bank JM Financial, said it could take longer for Idea to make a mark in Mumbai, where Vodafone Essar Ltd, with 3.8 million subscribers at the end of August, is the largest mobile phone operator. It is followed by Reliance Communications Ltd with 3.1 million subscribers, and India’s largest mobile phone services firm Bharti Airtel Ltd, with 2.5 million customers in the city.
“There is space, and there is churn,” said Irani, referring to the phenomenon of subscribers switching operators. “Expecting a miracle to happen overnight would be unfair.”
That churn could increase once subscribers can retain existing numbers when they switch telcos, something that will become possible by the middle of next year, when the so-called number portability comes into effect. But it still won’t be easy in Mumbai where only one telcom company could add more than 100,000 subscribers in July, net of those who moved to other operators.
Growth in the two largest — and lucrative — markets for mobile services, Delhi and Mumbai is slowing: a Mint report on 9 August said the average monthly addition of subscribers in Mumbai has dropped to around 91,000 in the first six months of this year from more than 155,000 last year. In the same period, average monthly additions of subscribers in so-called C circles, or smaller cities and towns, was close to a million, up from around 680,000 last year. Still, revenues per user are much higher in cities such as Mumbai and New Delhi. According to an official from a rival GSM network, average revenue per user in Mumbai is around Rs375.
Idea Cellular has grown significantly over the past two years, after the Aditya Birla Group acquired complete control of the company. In this period, the group hived off the company’s telecom tower business into a joint venture with rivals Vodafone and Bharti, and acquired Spice Telecom, increasing its subscriber base from nine million to 28 million.
At the time of the Mumbai launch, Aga had said Idea would try and set a benchmark for quality in a city where dropped calls are common. The mobile phone operator, already present in other parts of Maharashtra, which is a different telecom circle from Mumbai, had also hoped to benefit by having its Maharashtra subscribers on its own network when they travelled to Mumbai.
Roaming charges, a term used to define the fees paid by a subscriber to make and receive calls when travelling, have dropped sharply in recent years, however.
Idea’s tariffs on launch are “broadly comparable” with those of its rivals, the brokerage’s report said, adding that the company plans to invest Rs800 crore in the Mumbai circle and is willing to wait for four years to break even.