Indian mobile carrier's growth rooted in farming villages

Takafumi Hotta
Nikkei Asian Review
27 October 2015

New Delhi: The yellow signboards of Idea Cellular stand out on any street comer in this country, with India's No.3 mobile carrier tapping into rural areas for growth. The company is a key unit of Aditya Birla Group, which deals in industries ranging from mining to retail. Part of major Indian conglomerate Birla Group, Aditya Birla is strong in telecommunications.

Aditya Birla has invested $15 billion in telecommunications and plans to spend a further $7 billion over the next five years, Chairman Kumar Mangalam Birla told The Nikkei. Idea Cellular's net profit surged 62% to 31.9 billion rupees ($491 million) for the year ended in March.

The carrier carved out its market share - about 17% as of the end of August – by focusing on rural areas and enlisting youth hailing from local farming villages for help with marketing. The figure compares with leader Bharti Airtel's 24% and No.2 Vodafone's 19%. Idea Cellular narrowed the gap with the U.K. carrier by more than 1 percentage point from a year earlier.

Besides Aditya Birla, Idea Cellular previously counted Tata Group and AT&;T among its major shareholders following the mobile company's 1995 founding in Mumbai. But management of the carrier has been centralized after exits by the Indian and U.S. giants.

With high-speed 4G service poised to redraw the industry map, the local telecom market stands at crossroads. Bharti Airtel has already launched 4G, with Reliance Industries set to enter the fray this year. Idea Cellular, which is expected to roll out the high-speed service during the first half of 2016, may need to pick up the pace.