Idea decides to bridge gap with peers, to roll out 4G in 10 service areas next year

MUMBAI: The story goes that some months ago an investor expressed impatience with Idea Cellular's stance that the Indian consumer wasn't ready for 4G or next-generation, high-speed network technology.

The investor suggested that this belief was misplaced, given that the competition was very busy on this front.

The argument seems to have convinced the company to revamp and advance its 4G strategy. Idea chief executive Himanshu Kapania announced on Tuesday last week that the company was striving to deploy 4G services within the first half of 2016.

The technology ecosystem, he said, had evolved faster than the company had anticipated. Idea's capex plan has surged six-fold to Rs 6,000-6,500 crore from Rs 1,000 crore for this fiscal year for the 4G play.

"We are also positively surprised at the speed of availability of a wide range of affordable 4G smartphones and devices," Kapania said.

"Therefore, post careful analysis of LTE technology, maturity and consumer demand surge across markets like China, Indonesia and other similar markets, Idea has decided to initiate necessary steps culminating into launch of Idea's own 4G services on LTE platform from calendar year 2016 in a phased manner."

The plan effectively means Idea's 4G launch has been advanced by a year. The announcement makes Idea a late arrival on the bandwagon. After the promised entry of Re liance Jio Infocomm as the first full-scale 4G telecom operator Bharti Airtel was first off the mark with a 4G deployment. Then came announcements from Vodafone In dia that didn't offer a launch date.

At the start of this year, Reliance Communications surprisingly threw itself into the race and said it was going to launch 4G services in Gujarat as early as November. No wonder Idea's investors were up in arms over the one company that had emerged as a challenger seemingly sitting on the sidelines.

"Where we don't have 3G or where consumption is high is where we will initially launch 4G," Kapania told ET. The company plans to roll out 4G in 10 service areas in 2016, with some expecting it to start in March. Should Idea thrust itself into a speedy 4G deployment? Analysts and investors have mixed views on this.

On one hand, they feel Idea Cellular is more vulnerable to Reliance Jio's competitive assault since it still holds the position of challenger and could be the Mukesh Ambani-owned company's first target.On the other, perhaps the customers of Idea can still afford some lag in new technology adoption.

In an investor call held on Wednesday, Idea said its days of incremental capital expenditure were a thing of the past.

"We maintain a negative stance on the company due to increased capex needs for supporting robust data growth and the threat of Reliance Jio, which could pressure tariffs, both on voice and data, resulting in muted revenue and EBITDA (earnings before interest, taxes, depreciation, and amortiza tion) growth," said Vivekanand Subbaraman of HDFC Securities in his post-result report.