Idea Cellular has won ET’s “Emerging Company of the Year” award for 2009. Idea has emerged as the fastest-growing listed telecom company. The company’s intense and strong marketing and brand initiatives, along with advantages of spectrum and a clear-eyed management focus on growing and expanding its subscriber base, were the key constraints that worked for them.
Idea is likely to overtake BSNL and emerge as the fourth-largest cellular operator with about 50 million or more users. Since its IPO in 2007, its market cap performance is second only to Bharti Airtel . While Bharti’s m-cap in July 2007-July 2009 fell just 5%, Idea’s has fallen about 29%.
This is significant, considering that Idea was a relatively unknown brand till about three years ago, while firms such as Bharti and Reliance were already well established.
There are other reasons behind Idea’s strong performance. The spectrum band it uses, the 900 Mhz, is considered very conducive to subscriber growth and gaining market share. The 900 Mhz spectrum is able to provide at least 50% more geographical coverage than the 1,800 Mhz and capex and operating costs are much lower. Also, expanding in rural markets in the 1,900 Mhz spectrum tends to be quite difficult. Idea is among the few telecom companies to have added more subscribers in rural areas. Idea Cellular – the name was changed in 2002 – is today a success story in the telecom industry.