The management of Idea Cellular sees Uninor’s recent dynamic pricing plans (discounts linked to capacity utlisation) as being factory-oriented rather than consumer-oriented. Idea believes these plans are not impactful so far and hence unlikely to trigger price reaction from other operators. Further, Idea’s top management said that irrational competition has not gone away.
Idea estimates that the government’s proposed hike in spectrum charges could hurt EBITDA margins by ~60bps. For now, TDSAT (Telecom Disputes Settlement & Appelate Tribunal) has stayed the government’s decision to hike spectrum charges.
In 4Q FY10, Idea’s traffic grew 14% QoQ on the back of 15% QoQ growth in 3Q FY10. Idea said that this strong growth was explained by a combination of factors like lagged elasticity to tariff cuts, market-share gains and cost cuts.
Idea reiterated its keenness to participate in upcoming BWA auctions. The company declined any comment on ongoing 3G auctions but conceded that operators in India are spectrum-starved relative to their global peers.
Equipment Clearance – Idea said the sharp drop (-40% QoQ) in its 4Q capex spend reflects impact of recent government policy. The government recently stipulated that key equipment purchases by operators require “security clearance”. Idea indicated that the government is working with operators to resolve associated bottlenecks.