High prices limit Idea’s 4G growth; Reliance Jio launch could add more pressure

After several quarters of spectacular growth in its wireless data business, Idea Cellular seems to have hit a wall in the January-March quarter, with data growth falling to a disappointing 1.5% from 15-17% seen recently.

In comparison, Bharti Airtel reported a data volume growth of 9.6% during the same three months, indicating that much of the problem remains with the operator rather than the market. Idea did not explain why data growth fell off a cliff during the fourth quarter of its financial year.


One of the reasons may be the disappointing take up of Idea’s 4G service compared to that of Airtel.

4G LTE is supposed to lower the price and increase the consumption due to its high efficiency.

However, surprisingly, Idea’s 4G customers are using even less data than its 3G customers.

According to the company, by the end of March, Idea had 6.8 lakh (0.68 mln) 4G data customers, who together used 1.44 bln MBs during the three months. That gives you an average 4G data consumption of just 704 MB per user per month.

For the same three months, Idea’s 23 mln 3G data users consumed 56.2 bln MBs, giving an average consumption of 818 MB per user per month.

These numbers are far below what a 4G network can support.

For example, Reliance Jio, which will soon start its operations, is targeting an average data consumption of 10 GB per month per user.

Part of the reason for the lower quantum could be that many of these users came on the 4G network during the middle of the quarter, unlike 3G users who have been on the network for all 90 days of the quarter and could therefore consume more.


However, another reason would be Idea Cellular’s attempt to focus and maintain per-MB data prices when users move from 2G to 3G and 3G to 4G instead of looking at increasing revenue per user by encouraging him to consume more by lowering the per-MB price.

This is how operators looked at the price vs volume question in the 2G data era, when it made sense to focus on a per-MB  price as the network had very limited capacity and there was no point in trying to drive consumption beyond a point.

However, in the 4G era, companies continue to focus on per MB pricing, missing the opportunity to convert a Rs 100-per-month data user into a Rs 400-per-month user by lowering data prices.

In its press release, the company rather proudly says: “After 6 quarters of steep fall in Voice and Mobile Data Realised Rate, Idea — by clamping down on promotional offers in the fourth quarter for new & existing customers — is pleased to share.. mobile data realised rate (price) improved from 22.3 paise per MB to 22.9 paise quarter on quarter, an increase of 2.9%.”

In other words, despite a single 4G tower being able to deliver 100 times the quantity of data that a 2G tower can deliver and 4-10 times that of 3G, Idea is seeking to charge the same price per MB for consumers using all these technologies.

Company’s CEO Himanshu Kapania said it was ‘testing the waters’ with a price increase to see how the consumers would respond and that the quarter can be seen as a ‘one off’.

“We are not losing sleep over that,” he said.

Kapania was asked why Idea was not cutting its 4G data prices aggressively before the launch of Reliance Jio and creating for itself a strong defensive position in the market.

In reply,  Kapania said cutting prices was not the only way to increase data consumption. He said he has a team that focuses on converting non-data users into data users and that the company nudges such subscribers into consuming data by giving small trial packs.

In addition, he said, consumers have to open their minds to spending on data. While many consumers are happy to spend Rs 150-200 per month on voice, they are more reticent when it comes to spending on data, he said.

“A big drop (in prices) alone is not going to be the driver to attract consumers. These consumers will have to expand their outlook on telecom spending (they) have to start spending on mobile Internet.”

Despite operating profits improving noticeably, Idea’s stock ended the day down 6% due to lackluster results.



Nevertheless, Idea continues to make big investments into the new technology, and has almost caught up with Bharti Airtel in terms of the geographic extent of its 4G network.

Part of the reason behind the investment spree could be that the company feels that without an aggressive 4G roll out, its total data consumption on the network could start declining.

As of the end of March, Idea Cellular had extended its 4G network to 1,327 towns and 2,619 villages. This is comparable to the coverage of the biggest commercial 4G network in India, that of Bharti Airtel.

By the end of March, the Aditya Birla Company had almost caught  up with Bharti Airtel in terms of the total number of 4G towers. Since then, it has probably surpassed the market leader (see the green line in the chart below vs the yellow line. The chart has been made on the assumption that Airtel added about 13,500 3G towers during the quarter.)airtel-idea-4g-3g-number-towers

However, we should add that despite having a comparable, or even higher geographic 4G coverage compared to Bharti Airtel, Idea Cellular is unlikely to have even 50% of the capacity of Airtel’s 4G network due to the small quantity of spectrum used by it.new-tower

While Airtel uses 10+20 MHz  of spectrum in most circles for 4G, Idea uses only 10 MHz, which gives the Airtel network about three times the capacity that Idea’s 4G network will have for the same number of towers.

However, capacity constraints are likely to be a problem only later on when 4G usage becomes widespread, though such worries could limit Idea’s ability to respond to cut-throat 4G offerings from Bharti Airtel and Reliance Jio in the future.

As part of its fervent efforts to remain in contention in the data age, Idea is also investing heavily into fiber optic networks.

It created an extra 10,000 route kilometers of fiber network during the three months — the highest ever addition during any quarter in the company’s history. With this, the company has 1.15 lakh km of fiber.

This comes in the wake of news that Reliance Jio has already crossed the 2.7 lakh km mark and will have 3 lakh km of fiber by March next year.

Bharti Airtel, however, did not seem to be overly worried on the fiber front and added only another 5,000 km to take the total to 2.1 lakh route km.

Idea also saw brisk addition of 4G devices to its network.

In fact, nearly all of the new high-speed data devices added to Idea’s network during the three months supported 4G. With this, the number of subscribers who possessed 4G phones increased from 3.5% at the end of December to 6.2% at the end of March.


Idea’s lack of data growth is likely to lead the operator to cut the prices of its 4G data offerings.

In the Jan-March period, the company was charging 22.9 paise per MB, or about Rs 230 per GB for data, compared to 22.3 paise in the previous three months.

This increase in price was probably what led to the poor growth in data usage during the period.

In contrast, Bharti Airtel, which saw a 10% jump in data usage during the same period, cut its data prices at the same time. Bharti Airtel’s average data price fell 4% during the quarter to about 230 per GB from about Rs 239 per GB in the previous three months.

Both these companies are expected to be forced to cut their prices to at least about Rs 100 per GB after the launch of Reliance Jio’s 4G services in the coming weeks.

The Mukesh Ambani-led company is expected to charge only around Rs 50 per GB on average — or about one-fifth of what Idea and Airtel charge.

Meanwhile, Jio’s network partner and a low-cost data provider Reliance Communications has started upgrading its CDMA data users to 4G, though it has not revealed its new 4G data tariff plans. However, RCom is expected to offer between 30-40 GB for Rs 1,000, which comes to Rs 25 to 33 per GB for high volume users.
[socialpoll id=”2355215″]

Reliance Jio now allowing unlimited night downloads under Happy New Year plan Reliance Jio is now allowing its users to download an unlimited quantum of data at night under its Happy New Year offer.This is different from the earlier practice of allowing users to consume only 4GB of data per 24 hours.With this new feature, subscribers can download or consume 30 GB or 40 GB or even more data between 2 am and 5 am without aff...
How to overcome Reliance Jio’s 1GB limit by timing your downloads According to our tests, it is possible to download more than 1 GB using a single Reliance Jio connection using the Happy New Year offer.According to our tests, there is no limit on the number of GBs that can be downloaded under the Happy New Year offer between 2 AM and 5 AM.In our tests, we have been able to download over 40 GB in one night, without ...
Vodafone halves 4G data prices: 4 GB at 255 | 22 GB for 999 Vodafone has halved data prices, six months after cutting them by about 40%.Under the new 4G tariff announced today, customers will get 4 GB of data for Rs 250 and 22 GB for Rs 999.These are roughly half of the prevailing data rates in the market.The current data price in the market is 2 GB for Rs 250 and 10 GB for Rs 999.Vodafone is also off...
1GB LIMIT: Reliance Jio starts restoring full speed at end of day Reliance Jio, India's largest provider of wireless data, has modified its bandwidth limitation policy to restore full speed for the subscriber under its Happy New Year offer the next day.So far, a 4G subscriber who crossed the daily FUP limit of 4GB or 1GB had to wait for exactly 24 hours for Jio to lift the speed limits.Under the new policy, he ...
Airtel doubles 3G speed in Delhi with more spectrum Bharti Airtel, India's top telecom provider, introduced its second 3G carrier in Delhi, more than doubling the speed of the existing network for most smartphones.Not only has the company introduced a second 'carrier' (block of spectrum) adjacent to the first one, it has also implemented the technology to merge the two blocks into one, thus boosting downl...
BSNL to start 4G services only after April – CMD Bharat Sanchar Nigam Ltd, the state-owned telecom services provider, will start its 4G services only in the next financial year that starts in April."BSNL is likely to start 4G services in 2017-18," Anupam Shrivastava, the chairman and managing director of the company said.The company has fallen far behind all its rivals in putting up 4G networks e...
BSNL to soon relaunch Rs 498 “truly unlimited” 3G plan, new packs on Republic Day State-owned Bharat Sanchar Nigam Ltd has decided to "relaunch" its 14-day "truly unlimited" 3G plan, chairman and managing director Anupam Shrivastava said today.The plan, introduced in early December, was pulled after only one month. It offered truly unlimited 3G data usage at just Rs 498 with a validity of 14 days.The 498 recharge was one of th...
Idea Cellular increases free data in unlimited scheme by 4 times Idea Cellular today increased the free data allocation on its existing unlimited calling packs.Compared to 1 GB of 4G data that customers were getting with the Rs 348 pack, they will now get 4 GB.Similarly, the free data allocation for those who do not have 4G handsets has been increased from 50 MB to 3 GB per month -- an increase of 60 times. ...
Bharti Airtel to launch pan-India Payments Bank tomorrow Bharti Airtel, India's largest telecom company, will take a crucial step towards entering the financial services business as it launches its Payments Bank operation across India tomorrow.Payments Bank refers to a limited operations bank that can be primarily used for making transactions, and not for depositing money.The operator has already start...
SUPERHOUR: The SECRET behind Vodafone’s Rs 16 offer It is no secret that India's second biggest telecom operator by revenue -- Vodafone -- is under threat from a rapidly growing No 3 -- Idea Cellular -- and an aggressive newcomer -- Reliance Jio.Though Idea is still behind the British firm when it comes to total revenue, Idea has already overtaken Vodafone as far as the data business is concerned, acc...
Vodafone 4G reaches UP West; Goa, Chennai, Punjab next Vodafone has launched its 4G network in UP West and Uttarakhand offering "4 times" as much data for a 1GB pack.Among the first wave of cities are Dehradun, Haridwar, Aligarh, Nainital and nine other prominent business, tourism and educational hubs."4G services will soon be available across several other major towns across the circle by March 2017...
Bharti Airtel offers 3GB of 4G data free per month for one year, with conditions Bharti Airtel, which has come up with various 'free data' schemes of late, has kicked off one more such scheme -- offering 3 GB of free data per month for those availing certain handpicked recharge and billing schemes.For prepaid users, the free data is available if they recharge Rs 345 per month. The Rs 345 recharge also gives free unlimited voice calls...
Reliance Communications sells its towers to Brookfield for $1.6 bln Reliance Communications Ltd announced the signing of binding agreements with Brookfield Infrastructure for the sale of nationwide tower assets to Brookfield Infrastructure Partners LP and its institutional partners.RCOM will receive an upfront cash payment of Rs. 11,000 crore (US$ 1.6 billion).RCOM will also receive Class B non-voting shares in t...
TRAI wants FREE DATA for everyone, without ‘gatekeeping’ by telcos India's telecom regulator has suggested that every rural citizen should be given 100 MB or so per month on a free basis to help the spread of digital revolution in the country. It has also suggested allowing 'third party aggregators' like Facebook to offer free data, but only if they can keep telecom companies totally out of such efforts.Both suggestions...
Bharti Airtel completes pan-India 4G with Assam; offers 10 GB for Rs 249 Bharti Airtel launche its 4G services in Assam, starting with Dibrugarh and Tinsukia. "With this, customers in Dibrugarh and Tinsukia can now enjoy high speed mobile broadband on Airtel 4G and get on to the digital superhighway to enjoy uninterrupted HD video streaming, superfast uploading and downloading of movies, music and images," the company said. ...