This document provides a strategic analysis of Idea Cellular, an Indian telecommunications company. It discusses Idea Cellular's background, market share, ownership structure, and licenses. A SWOT analysis is presented. Key challenges for Idea Cellular are identified as the need for diversification, reducing costs, increasing average revenue per user, expanding the enterprise customer base, and increasing presence in major cities. Various corporate and business level strategies are proposed, including mergers and acquisitions, diversifying into broadband, DTH, and in-flight WiFi services, rural penetration strategies, and operational and financial strategies. Metrics for a balanced scorecard to track performance are also included.

1. STRATEGIC ANALYSIS OF IDEA
CELLULAR
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)

2. 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
2
4/27/2012 Strategic Analysis of Idea Cellular

3. SWOT ANALYSIS
3
4/27/2012 Strategic Analysis of Idea Cellular

4. KEY CHALLENGES
 Need for diversification
 Reduce Operational Costs
 Increase ARPU
 Increase Enterprise Customer Base
 Increase presence in metros
4
4/27/2012 Strategic Analysis of Idea Cellular

5. 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.
5
4/27/2012 Strategic Analysis of Idea Cellular

6. 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 6
4/27/2012 Strategic Analysis of Idea Cellular

7. 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
same
4/27/2012 Strategic Analysis of Idea Cellular

8. 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
8
4/27/2012 Strategic Analysis of Idea Cellular

9. 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
ARPU
4/27/2012 Strategic Analysis of Idea Cellular

10. RURAL PENETRATION – FUNCTIONAL
STRATEGY
 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 10
4/27/2012 Strategic Analysis of Idea Cellular

11. 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
11
4/27/2012 Strategic Analysis of Idea Cellular

12. BALANCED SCORECARD Target
Sr
No 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

13. QUESTIONS
13
4/27/2012 Strategic Analysis of Idea Cellular