Idea Cellular won't rush into buying spectrum at auction: Himanshu Kapania, MD

Idea Cellular doesn't see the need to participate in any spectrum auction immediately because it can buy the airwaves through secondary sale at the time it needs frequencies, said the company's managing director Himanshu Kapania in an interview with ET's Deepali Gupta. At the moment operators are creating a surfeit of data capacity on the network, which will take a couple of years to utilize, he said, adding that Idea would rather monetize its current assets than plan too far in the future. Edited Excerpts:

Will you dilute equity to participate in a likely spectrum auction in 2016?

We must monetize our assets. We are not a gatherer of spectrum. We believe the government will have more spectrum, and with trading and sharing norms and market consolidation, there will be enough spectrum to be bought. For now we have 4G spectrum in our 10 and two more Videocon circles, 3G which we will expand, and we must monetize the asset we have.

Idea shares are more affected by the threat from Reliance Jio than other incumbents, are you taking any counter measures?

The arrival of Jio is an opportunity, I have said. We are about to run a marathon and Jio will expand the size of the market. In three to four years we will go from 90 million broadband users to 500 million. We are preparing for the tsunami of consumption that will hit in 2018 now.
Revenue and profits seem to be growing slower than anticipated, why?

Revenue growth has come under pressure. In the calendar year 2015 the growth has been 4.5% to 5.5% compared with nearly 10% in 2014. This has been partly because of TRAI intervention in interconnect charge and capping of roaming and SMS charges. Partly because of pressure on outgoing call prices due to competition. I would put my neck out now and say we have reached the bottom and prices will rise from here.
What about pricing pressure on data services?

In data we are now targeting first time customers which also puts pressure on realization. Yet migrating a customer from 2G to 3G or 4G takes the customer ARPU (average revenue per user) from Rs 50-75 a month to about Rs 175-200.

Data capacity (on operator networks) is being added and will grow to nearly four times by the end of this year. The pace of consumption is picking up, but it is not as fast as that.

Are you trying to enter the wired broadband market like Bharti and Vodafone?

Wired service is a niche segment. We have experimented it to learn the WiFi market and to protect strong markets where we have the premium customers. Apart from Pune we have identified Hyderabad, Ahmedabad and Kochi for it.