Idea Cellular, India’s fifth-largest cellular operator launched its mobile services in Mumbai on 20 August. With this, the telco has become the fifth GSM operator to offer mobile telephony services in Mumbai.
The Aditya Birla group company will offer mobile services on a cellular network that will have a capacity of handling up to 1.5mn subscribers. Idea expects to invest around Rs800cr in the Mumbai circle in FY2009, of which around Rs650 crore has already been invested, including Rs203 crore as licence fee.
Mumbai is one of the country’s most lucrative telecom circles and the company expects to garner 20% of the net adds here. Idea is starting with 1,000 cell sites, which is reportedly the largest-ever in the world for a city launch.
The network expansion in the city has been aided by tower sharing with Indus Towers, the joint venture company formed between Idea Cellular, Bharti Infratel and Vodafone-Essar.
It expects to break-even in Mumbai by four years. As part of its strategy to promote the Idea brand, it will roll out about 60 exclusive outlets in the city. The company will provide both pre-paid and post-paid mobile connections to its potential customers.
This roll out now gives Idea a presence in 14 of the 22 telecom circles in India (including Spice). It will aid traffic flows, given that a significant part of the country’s mobile traffic either originates or terminates here. We maintain a BUY on the stock, with a target price of Rs132.