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
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4/27/2012 Strategic Analysis of Idea Cellular
3. SWOT ANALYSIS
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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
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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.
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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
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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
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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
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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
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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 % % % % %
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International to local currency loan
5 Financial performance ratio 0.33 0.37 0.415 0.457 0.5
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13. QUESTIONS
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4/27/2012 Strategic Analysis of Idea Cellular