Idea now ‘fully equipped’ for bundled 4G offers

Idea Cellular may have been six months behind competitors in rolling out 4G services, but having spent Rs12,798 crore in the recent auctions, it is now fully equipped to take on competition, especially attract users from smaller rival, its managing director Himanshu Kapania said.

In an interview with The Economic Times, Kapania said Idea was prudent at the auctions, the example being shifting to 2100 Mhz band after initially fighting for 1800 Mhz in Mumbai when prices went high.

He added that the telco is comfortable operating with its current net debt to equity ratio of 4 to 4.2 for 2-3 years, given its cash flows, but it has the option of monetising its towers, if needed.

''Our Mumbai bidding was part of the game plan,'' Kapania said. ''When we started bidding in 1800MHz, it was attractively priced because the 4G ecosystem is most developed for this band. When it became too expensive, we went to the next best band - 2100MHz. We have increased our spectrum holding by 64 per cent. We now have 650 MHz for broadband service of which 170MHz will be used for 3G and 380MHz for 4G services.''

Asked how the company would use the 2100 MHz band, usually used for 3G, to 4G services, he said, ''You can deploy 4G on 2100MHz. In fact most devices are 2100MHz compatible, because the fall-back from 4G was conceived to be 3G. Now any of the bands can be used for 4G, so where we have a second carrier (5MHz is called a carrier because it is the minimum required to offer reliable service) we will use it for 4G and we expect competition will do the same.''

On what would be Idea's capital expenditure on network deployment, Kapania said, ''Our priority is to maximize the spectrum we have just bought and what we bought in 2015. This is why in FY16 we increased our capital expenditure apart from what will be spent of spectrum to Rs7,500 crore. Then this year we had said we will spend Rs7,000 crore but we will now be increasing it by Rs1,000 crore. After this the capex will taper off unless there is a big demand for data.''

On the effect of the entry of Reliance Jio, he said, ''Out of a billion users, around 950 million continue to have only 3G and 2G handsets. In a couple of years there will be 100 million smart phone users with 4G in the market. For the remaining 900 million, there will be consolidation as subscribers will shift from trailing operators. Idea has always been a mass operator.

''In the 4G space we may be six months behind, but the market will grow gradually. Every operator will soon start offering bundled plans, like Jio, to take on the market.''