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Idea Cellular IIM Lucknow Strategy
 

Idea Cellular IIM Lucknow Strategy

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    Idea Cellular IIM Lucknow Strategy Idea Cellular IIM Lucknow Strategy Presentation Transcript

    • STRATEGIC ANALYSIS OF IDEACELLULAR Section ‘D’ Group 3 Vaibhav Sathe (PGP26182) Varun Boppana (PGP26206) Rahul Satpathy (PGP26233) Sai Chand Chintala (PGP26239) Sneha Pandit (PGP26242) Gopi Krishna NV (PGP26248) Chandrasekhar Y (PGP26254)
    • ABOUT THE COMPANY Part of the ABG conglomerate Current market share of 11% 22 Telecom circles ABG – 49.1% and AXIATA – 14.99% 3G licenses in 11 circles 24/27/2012 Strategic Analysis of Idea Cellular
    • SWOT ANALYSIS 34/27/2012 Strategic Analysis of Idea Cellular
    • KEY CHALLENGES Need for diversification Reduce Operational Costs Increase ARPU Increase Enterprise Customer Base Increase presence in metros 44/27/2012 Strategic Analysis of Idea Cellular
    • CORPORATE LEVEL STRATEGY Mergers & Acquisitions  Industry heading towards imminent consolidation  Should target smaller companies with synergies  Subscriber base linked to allocation of additional spectrum  Proposed M&A norms by TRAI to revise upward the minimum number of competitors to be present in each telecom circle.  Idea should consider gaining first mover advantage in consolidation. 54/27/2012 Strategic Analysis of Idea Cellular
    • CORPORATE LEVEL STRATEGY Diversification – Broadband & IPTV  +  Broadband Penetration of 1% (11.21 million)  Government Plan to increase broadband connectivity like Bharat Nirman  60,000 km of fiber optic network can be leveraged for backhauling  -  High Capex costs - Last mile connectivity  Existing fixed line DSL – Easier to convert to Broadband rather than new provider  IPTV – Not enough bandwidth commissioned  Idea shouldn‟t diversify into Broadband services 64/27/2012 Strategic Analysis of Idea Cellular
    • CORPORATE LEVEL STRATEGY DTH  220 out of 370 million TV sets belong to low density rural areas  Synergize with telecom services for billing and customer support to the DTH  Leverage powerful telecom brand and marketing campaign of “What an idea sirjee”  Customer acquisition from the local cable operators  In-flight WiFi – using use DTH infrastructure for the 7 same4/27/2012 Strategic Analysis of Idea Cellular
    • BUSINESS LEVEL STRATEGY Coopetition  Indus Towers  Joint venture between Airtel, Idea and Vodafone  110,000 towers - world‟s largest tower company  Decrease in CapEx and Opex costs  3G Tie-up  Airtel, Idea and Vodafone - sharing the 3G networks in the circles where they do not have licenses  Idea offering 3G services in Delhi, Kolkata via Vodafone‟s network  Vodafone offering 3G services in Andhra, Kerala through Idea‟s network  Airtel offering 3G services in Gujarat through Idea‟s network 84/27/2012 Strategic Analysis of Idea Cellular
    • BUSINESS LEVEL STRATEGY Rural Penetration  Relative saturation of the Metros and Urban Areas - Urban Tele density for wireless subscribers is 150.06  Lower penetration in the rural areas – Rural Tele density for wireless subscribers is 32.75  The growth rate in the rural subscribers has been 48% and 71% over the last 2 years  Lower ARPU, increased CapEx and OpEx  Margins to be a result of the volumes rather than higher 9 ARPU4/27/2012 Strategic Analysis of Idea Cellular
    • RURAL PENETRATION – FUNCTIONALSTRATEGY Product  Cheaper handsets from Chinese ODMs  Preloaded application providing information about weather, agriculture, market prices etc.  GPRS at nominal/subsidized rates Marketing - Distribution  Leverage the „Business Correspondent‟ channel – „My Cash‟ tie up with Axis Bank as a distribution channel  An alliance with ITC e-choupal should be considered Operations  Indus towers alliance – Decrease in Opex 104/27/2012 Strategic Analysis of Idea Cellular
    • FUNCTIONAL STRATEGIES Operational  Tower Infrastructure – Indus Towers into all 22 circles  Sharing of the backhaul infrastructure, pooling of resources  Outsourcing of the call center operations (English) Financial  Low Cost Debt Financing in International Markets 114/27/2012 Strategic Analysis of Idea Cellular
    • BALANCED SCORECARD TargetSrNo Objective KPI 2011 2012 2013 2014 2015 Improve corporate 1 profitability Profit % 7% 8% 9% 10% 11% 2 Rural Diversification Rural ARPU (in INR, in real terms) 120 150 180 210 240 Mobile device as % of e-choupal users 2% 5% 7% 9% 12% Revenue of DTH as % of total 3 Diversification revenue 1% 4% 7% 10% 12% In-flight WiFi as % of business travellers 1% 2% 3% 4% 5% Operational Efficiency Power and Fuel Cost as % of 4 Improvement revenue 7.79% 7.20% 6.60% 6% 5.40% 48.34 45.43 42.52 39.61 36.70 Manufacturing Expenses % % % % % 12 International to local currency loan 5 Financial performance ratio 0.33 0.37 0.415 0.457 0.5 4/27/2012 Strategic Analysis of Idea Cellular
    • QUESTIONS 134/27/2012 Strategic Analysis of Idea Cellular