Idea Cellular’s 4G penetration, inferior to that of Bharti Airtel and Reliance Jio Infocomm, will likely be further exposed as the high-speed broadband market expands on launch of Reliance’s 4G featurephone, say analysts.
Himanshu Kapania, Managing director of Idea, It’s believed that he said we need to launch new technology such as Jiophone to stay competitive in Indian 4G market. As analyst say that Idea 4G is slower than Airtel 4G and Jio 4G.
JioPhone is giving a hard time to all the cellular companies in India as they have to give better offer or subsidise their services.
“This weakness can stand exposed with Jio’s 4G featurephone launch, which will take India’s 4G market to semi-urban and rural areas.” According to analysts, Kapania admitted the four million sequential drop in data subscribers in the first quarter was due to a lack of 4G services, but added that the telco is investing in expansion and technology. He said Idea will launch voice over LTE (VoLTE) services near fiscal-end. Idea’s data subscribers are decreasing despite substantial discounting — as evident from the 53% quarter-on-quarter decline in data yields.
Idea appears more vulnerable to Jio’s onslaught on data,” said JP Morgan in a note to clients after Idea posted its third successive net loss, at Rs 815 crore, in April-June. The brokerage said Idea’s 4G coverage is 30% in its 4G circles and this penetration is quite inferior to Airtel or Jio.
It expects Idea to be under “significant pressure until they are able to merge with Vodafone to gain scale”. Idea and no. 2 telco Vodafone are in the process of forming a joint venture with equal rights, which would create the country’s No. 1 telco by subscribers and revenue market share which would be better placed to take on the competitive threat posed by Jio.
The merger has recently received the nod from the Competition Commission of India (CCI), and the two telcos are now awaiting regulatory approvals from Sebi and stock exchanges – applications for which have been filed – besides the telecom department. Brokerage CLSA said that Idea’s cash profit of Rs 960 crore fell short of capex by 18%.
Let’s hope for the best for retail customers as they tend to enjoy the free service of JioPrime members you never know what reliance may pull up next in telecom industry.