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Idea Cellular Is Ready To Battle Out In 4G market
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With its larger rivals either launching or lining up 4G offerings, the country's third-largest telecom player Idea Cellular has said it is well-placed to compete in the segment. The telecom company is all set to launch its 4G service in 10 circles in the coming January to March quarter.
Quoting sources, CNBC-TV18 has reported that the Aditya Birla Group company is working with a deadline of January-end.
The proliferation of cheap smartphones has boosted the demand for mobile data as subscribers seek faster downloads and use their handsets to access the Internet. The 4G network is considered superior for data services, which as a segment is proving to be a money spinner for telecom players.
Analysts said the next phase of growth for operators would come from mobile data, which was increasingly replacing voice as the main growth driver.
In July, the telecom company reported a better-than-expected 28 per cent rise in quarterly profit, helped by higher data revenue. Idea Cellular has a capital expenditure (capex) of Rs 6,300 crore, of which majority will be spent on 4G roll out in the current year itself.
The company is also upgrading up to 80 per cent of its 2G sites to handle 3G services as well. At present, 3G services cover 275 million people and may potentially expand to 750 million in a few years, with the expansion in 3G and launch of 4G services.
Mobile operators are bracing for even more competition in an already cutthroat market as Reliance Jio, the telecom unit of conglomerate Reliance Industries, plans to launch 4G broadband services by December. Experts believe that Idea Cellular will be forced to step up capital expenditure, which could hurt profits in coming quarters as well.
Idea Cellular has bagged 4G licences in 11 circles, including Maharashtra and Goa, Madhya Pradesh, Chhattisgarh, Punjab, Mumbai, Andhra, Karnataka, Kerala, the North-East, Gujarat and Haryana.
Idea, part of the Aditya Birla conglomerate and also nearly a fifth owned by Malaysia's Axiata, spent close to $5 billion in a government airwaves auction in March, betting big on the India's significant mobile data potential.
Data services, such as Internet use, live streaming of TV and online gaming usually give an operator more profits than voice services, where profits have been squeezed by intense competition.
The number of mobile Web users in the country is expected to grow around 28 per cent annually between 2013 and 2017 and reach 314 million by the end of 2017, according to a report by the Internet and Mobile Association of India and KPMG.
Last month, Bharti Airtel, India’s largest telecom group by sales, became the first company to roll out superfast 4G mobile data packages across India, offering its service in about 300 cities and towns.
The second-largest telecom operator Vodafone has said it would launch 4G services in Calcutta, Mumbai and Delhi by December - setting the stage for a battle royale in this high-speed segment with Reliance Jio and Airtel.
The launch will make the Vodafone the third telco to launch 4G services after Bharti Airtel Ltd and Aircel Ltd. Vodafone has 4G services in 18 countries with over 20 million customers.