Idea Cellular launched GSM wireless services in Mumbai yesterday. We are impressed by the initial scale of network and promotional tariff plans, but we do think the Mumbai project will not add incremental value, even in optimistic scenarios.

Idea is starting with 1,000 cell sites and plans to have 1,500 sites (1.5 MM sub capacity) by Mar-09, of which we expect 40-45% to be leased from Indus Towers. Management is aiming for 20% market share of new subs, which is possible in the short run, in our view, but would not be sustainable once RCOM/Aircel make an entry into Mumbai later this year. Idea’s presence in Mumbai enhances profile and serve as a platform for a 3G launch in future, but is unlikely to result in any value creation.

From shareholders point of view, buying the stock because Idea established in Mumbai is poor idea sir ji 😉