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By Joyce Fan

The Indian telecom market has attracted attention across the globe as evidence of its staggering market potential comes further to light–every month sees 10 million new subscribers entering the world of telecommunications. However, this is only one side of the coin; the other reveals an ARPU under 5 USD, a population demographic in which 70% of people are concentrated in less-affluent rural areas, and a fiercely competitive arena that sees 8 operators battle for each service area. 

How can operators survive and achieve sustainable development in the Indian market? Mr. Sanjeev Aga, the Managing Director of the nation' s fastest growing telco, IDEA, adopts a decisively confident approach: "It doesn' t matter how many operators are behind us. We' re setting our own goals." 


Fastest growing in India 

WinWin: Would you please briefly introduce IDEA and its parent company, ABG? 

Mr. Sanjeev Aga: IDEA Cellular is one of India' s top mobile companies. By June 2009, we had attracted over 47 million subscribers. IDEA is part of the Aditya Birla Group (ABG), which is a multinational conglomerate with operations in 25 countries and over 100,000 employees. In fact, ABG is India' s first truly multinational corporation. 

India is divided into 22 telecom service areas, or circles. Until a year ago, IDEA had operations only in 13 circles, with a notably strong position in 9 among these. The company last year received licenses for the balance circles. Some of these, including Orissa and Tamil Nadu which deploy Huawei equipment, have got off to a strong start. Before the end of 2009, the yellow colors of IDEA will flutter across the length and breadth of India.

WinWin: How would you describe the Indian telecom market? 

Mr. Sanjeev Aga: The Indian telecom market has developed a little after the rest of the world, though it' s catching up rapidly. About 40% of India' s 1.16 billion population have already subscribed to telecom services, and this figure is growing by an average of 10 million per month. 

Up to eight mobile operators presently compete in each circle, with more new players anticipated. This gives rise to an ultra competitive market, one consequence of which is that it limits each operator to spectrum that is much smaller than is the average in other countries. This is the defining characteristic of the Indian telecom market: a very large number of operators with limited spectrum resources. 

The bulk of the Indian market potential is rural, and the physical infrastructure is generally weak. Road and fiber resources are inadequate, which in turn challenges operators in tapping the market potential.

WinWin: As you mentioned, India is a typical emerging market with huge potential and challenges. What' s it like to be a mobile operator in such a tough environment? 

Mr. Sanjeev Aga: The market potential in India is second only to that of China and the need for telephony services is high. But, per capita GDP is low and physical infrastructure is poor. Nonetheless, the capacity of mobile telephony to change people' s lives is extremely high, so to profitably match demand with supply requires both wisdom and ingenuity. 

To this end, most business models transplanted from other parts of the world have been discarded, and capable operators have established their own. In our case, we' re able to operate profitably at extremely low prices. 

IDEA' s belief is very simple–any competitive environment implies survival of the fittest. At one point, there were four operators. Now, there are potentially 12 to 14 in some circles. But these will trim to 8, and then eventually to 4 or 5. 

So it doesn' t matter how many operators are behind us; what matters is that we' re driving the top tier in terms of performance and quality. So, to achieve this goal, we set our own standards and seek to continuously enhance our capabilities. We are the fastest growing telco in the world' s fastest growing market, and achieved a back to back YoY revenue growth of 48% and 54%. We believe we are well-placed to remain one of India' s top operators.

WinWin: In both 2007 and 2008, IDEA was voted ahead of Nokia as India' s No.4 'Buzziest Brand' across all product categories. Can you tell us a little about IDEA' s brand concept and positioning? 

Mr. Sanjeev Aga: This is remarkable considering that when the voting was done, we were not even a pan-India operator, and yet were ranked No.4, across all product categories. 

The great strength of our brand is its uniqueness. Our brand name, imagery, the striking yellow brand color, is complemented by imaginative advertising and underpinned by our slogan: "An Idea can change your life". This is a sublime yet simple message that embodies our corporate spirit. 

Brand positioning alone is not enough: services that add value to customers are integral to success. No company can be India' s fourth 'Buzziest' brand and attract over 1 million new subscribers each month, unless its customers are satisfied and are responding positively to the product delivery. 


Segmenting markets 

WinWin: We know that the Indian market is very sophisticated and diversified. How does IDEA cater to the needs of different groups? 

Mr. Sanjeev Aga: We' ve put in place a variety of innovative tariff plans and service packages that cater to specific requirements.

For example, in 2006, we were the first in India to introduce the 'women' s card' which caters to the special needs of ladies on the move. It provides free tips on beauty, fashion, cooking, and health via a daily SMS. The card also features a safety alert function that can be sent without manual input to family and friends. 

For young people, we developed the highly popular 'Youth Card' , and our 2008 community group product, 'My Gang' , recently won the Golden Peacock Award 2008 at the 19th World Congress on Total Quality as the most innovative product. 'My Gang' was designed specifically to respond to the behavioral characteristics of college students, who are texting experts, and exhibit different peak calling habits from, say, business users. The 'My Gang' tariff is low for most of the day, and is higher at peak business hours, when this users segment is less likely to place calls. 

I' ve mentioned just a few examples of our diversified product packages. Based on a comprehensive understanding of customers' usage habits and profiles, we aim to design packages that add value. Additionally, IDEA simplifies package selection by making them available on the Internet and at retail shops.

WinWin: We notice that the majority of Indian customers are price sensitive and opt for prepaid deals, meaning that operators must be very careful in pricing. What is IDEA' s pricing strategy for different segments? 

Mr. Sanjeev Aga: You' re right. India is a predominantly prepaid market. This is largely because the distribution model in India has very little handset bundling and equally low handset subsidies. Acquisition cost is low by international standards and this is one of the reasons why Indian operators can sustain very low price points. 

When it comes to tariffs, any innovation can be immediately copied by someone else. Therefore, our emphasis is not to be clever, but to be predictable and transparent so that consumers don' t need to second guess. Consumers should feel secure in the knowledge that they' ve opted for an operator who has their best long-term interests at heart, and backs this up with a fair price, a robust network and a high quality of service. In fact, this broadly describes our pricing philosophy. 

As the market in India is super competitive, prices tend to reflect this. However, IDEA possesses very strong brand equity, and we have no reason to offer discounted products at an unsustainable level to simply garner a temporary advantage. I don' t think that Indian consumers will be fooled into choosing an operator that initially undercuts everyone else, but whose low prices cannot be sustained, and are not backed by service quality. 


Synergizing entertainment 

WinWin: Mobile operators are looking at value added services (VAS) as the next growth wave, and I think this is particularly true in the Indian market. How is IDEA doing in the VAS field? 

Mr. Sanjeev Aga: VAS contributes about 10% of our revenue. There are two sources: the first is the VAS contribution from earlier subscribers. This proportion continues to rise and generates the bulk of our VAS income. The second is new subscribers whose initial contribution is low, despite their vast numbers, but will rise with time. As is the case for many other operators, SMS is a big contributor, but IDEA is a category driver in the music arena. Our RBT, Dialer Tunes and Caller Tunes services create considerable revenues.

WinWin: As you' ve just implied, it' s well known that Indian people are very fond of music. How does IDEA integrate VAS with music? 

Mr. Sanjeev Aga: We have a very strong association with various Indian art forms. We run a highly acclaimed TV show called IDEA Jalsa in collaboration with the Indian Music Academy. 'Jalsa' in Hindi means 'celebration' . We basically bring Indian folk music and classical music–both vocal and instrumental–from different parts of India to the population at large, popularizing India' s rich musical heritage. Through concerts across India, we bring the richness of Indian music and culture to its people. Classical music aside, we also put out the IDEA Rocks India concerts, where we take the nation' s top pop stars to perform, not just in the big cities, but to smaller cities which normally do not get to see such performances. 

In addition to music-related events, we' ve also promoted a very popular RBT product, 'Star to Copy' , which is a fun and innovative IT-based service. For example, if I call you and I like your RBT, I just press * to copy it to my phone – it' s as simple as that. The innovation in this case is in the simplicity. Often, the simplest innovations are the most successful.

WinWin: Cinema is an essential part of Indian entertainment. IDEA is the title sponsor of the IDEA IIFA Awards. Would you briefly introduce this event, and explain how IDEA achieves synergies with it? 

Mr. Sanjeev Aga: The International Indian Film Academy (IIFA) is the Indian equivalent of the Oscars, and is one of the most widely viewed shows domestically. It is also highly popular across Asia, in fact across the world. 

Our association with IIFA has entered its fourth year. There are several synergies operating here. First, most Indians are fond of Indian cinema or 'Bollywood' , as it' s popularly described. It' s therefore extremely beneficial to have a close association with Indian cinema. Second, we believe that, in a few years, our mobile terminals will become another medium through which people in India will watch movies, film clips, and sound clips. For that reason, there is a very symbiotic relationship between IIFA and IDEA, a famous mobile brand sponsoring prestigious popular film awards. Overall, IDEA' s association with music and cinema is multi-dimensional. 


Exploring rural market 

WinWin: What is the contribution of the rural market to your overall business growth? And how does IDEA tap the rural potential? 

Mr. Sanjeev Aga: If you' re asking about our major customer segments, I' d say our greatest progress is represented by the understanding we now have of our rural markets, which account for the majority of our new subscribers. We' ve realized for some time that focusing our business models derived from urban markets is not the way to go. This has, not surprisingly, influenced our way of doing business–we' ve identified the building blocks, and have virtually reconstructed our business model, distribution, customer care, network, and also our entire HR system, including recruitment, training, and employee inductions. I think some of these processes are truly distinguishing our company.

WinWin: How do you foresee the market potential of mobile broadband in India, particularly in the rural market? 

Mr. Sanjeev Aga: The potential for mobile broadband in India will mirror the rest of the world–a slow start followed by an acceleration. This is because the ecosystem has to develop to attain momentum. Like many other things in India, I think our broadband experience will be slightly different from the rest of the world. 

Its potential for usage in rural areas is very high. One of the important factors in India is that the penetration rate of fixed-line broadband is very low, which implies that mobile broadband is likely to be people' s first broadband experience in many parts of India. 

You will, of course, have personal mobile usage. However, I suspect that in India, community usage will be high. In India, 20 years ago, we didn' t have sufficient fixed lines for individuals, and there was a huge waiting list, but then we had these public call offices which became very popular. 

Similarly, I think for broadband access it' s not just a question of networks and terminals, but also a question of purchasing power. While a large number of rural dwellers may be unable to afford an individual broadband connection, the need is still there, and can only be met by shared community broadband facilities that are within walking distance. The adoption of mobile broadband in India, I' m sure, will throw up its share of pleasant surprises.




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