39261883 IDEA Project Dharmender

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Ways to Increasethe Average

Revenue Per

Subscriber for Idea

Cellular Ltd.

Submitted to:

Prof. A.K.Biswas

Submitted by:

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Dharmender

Roll No-211

Summer Trainee

PGDM (International Business)

BIMTECH

ACKNOWLEDGEMENT

I would like to extend my sincere thanks to my corporate guide Mr. Kumud Singh

(Manager Corporate Sales, Idea Cellular Ltd.) and Mr. Ranjan Kaushal (Asstt.

Manager, Corporate Sales, Idea Cellular Ltd.) for giving me an opportunity to do my

summer training at their esteemed organization and assigning me a project topic. I amalso thankful to them for providing continuous cooperation, support and expert

guidance throughout the project. I would also like to pay my acknowledgements to the

all employees at Noida DST who helped me to get the field experience under their

guidance.

I would also like to pay my acknowledgements to my project guide Prof. A.K.

Biswas for acting as mentor and as catalyst during the entire duration of my project. I

am also thankful to him for providing me with useful references and information,

which were of significant importance for the completion of the project.

I would also like to pay my acknowledgements to all the corporate executives, for

taking out time from their busy schedule and providing me with relevant information,

which contributed significantly to my project analysis.

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Contents

Sr. No. Topic Page No.

Chapter 11. Executive Summary 4

Chapter 22. Introduction 7

Chapter 3

3. Objective & Scope 11

Chapter 44. Methodology 12

Chapter 55. Description of Current Situation 13

Chapter 66. Current Trends 33

Chapter 77. Findings & Analysis 39

Chapter 88. Conclusion 54

Chapter 99. Recommendation 56

Chapter 1010. Limitations 57

11. References 58

12. Appendix-Questionnaire 59

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Chapter 1

Executive Summary

Telecom Industry in India is touching new heights everyday and promises to be one of

the biggest markets across the globe but all Indian telecom companies are facing the

problem of decreasing ARPU (Average Revenue Per User). The project done with

Idea Cellular Limited was on to find the ways to increase the ARPU. The call rates in

India are lowest in the world and therefore there is a pressure on service providers to

increase the ARPU because their profit margin is decreasing continually.

The objective of the summer project was to understand the customer preferences

while choosing a telecom service provider. Other main objective of the project was to

study the trends in the International Telecom market.

The scope of the study was limited to Noida and Greater Noida region. This project

was conducted for Idea Cellular Limited to assess the preferences of mobile users in

India. . Data collected with help of questionnaire was put in excel sheets. A survey of

400 Mobile users was conducted in Noida and Greater Noida. The sample has covered

the mobile users of other service providers also as to understand the competition and

their strength and weaknesses.

The research design chosen was Descriptive Research Design because the survey was

conducted to get the customer insight and to know their preferences. Also it was to

find out perception about the service provided by telecom companies. So mainly it

was to describe the telecom market characteristics.

The sampling done was random sampling while conducting the survey. The survey

was conducted in Noida and Greater Noida region. A total of 400 telecom users were

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studied, and most of them belonged to the youth category because my main objective

was to find out the spending habit of Indian youth. And the reason behind this was

that its the youth who is revenue generator today. The secondary data was collected

to understand the market trends and forecast in developed and developing countries.

This data was mainly collected from the research companies sites on the basis of

their market research. These trends then were analyzed whether these can be applied

by Indian Telecom players.

The research showed that Idea Cellular Ltd. has a low image among its own

customers. They are not fully satisfied with the service they are getting. The main

reason for choosing a service provider is connectivity and Idea is not meeting the

expectations of the customers on this front. Idea is not able to retain its customers as

compared to other service providers. The churn rate for Idea Cellular is high and it has

maximum of new customers as compared to other service providers.

Satisfaction level with Price or Call rates of Idea users is high. Idea is positioned

among the user as a low price player. Idea attracts new customers on the basis of new

attractive scheme or promotional offers, means on the basis of prices which is a poorway doing of business.

The trends in developed countries show that the customers are demanding new and

new Value Added Services. As 3G is about to reach India so these high quality value

added services will no longer be out of reach of Indian Telecom companies.

Mobile Blogging is a very good application that is catching up very fast. Mobile

marketing can be a good revenue generator for the telecom companies. MobileLearning can also become a good value added service because unlike e-learning,

which is dominated by corporate buyers, mobile learning is being driven by

consumer, government, and healthcare buyers. A variety of new and enhanced m-

learning services cab be language learning, test prep, training podcasts, location-based

services and handheld continuing education content.

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Idea needs to focus on its existing customer base because the churn rate in telecom

industry is increasing at an alarming pace and the reason for it is the fierce

competition. As Airtel is doing now, calling its ex-customers and asking for the

reasons for leaving Airtel because it has realized the problem of churn.

Idea should work on its connectivity; its connectivity is not up to the desired mark. it

needs to keep coming with new attractive Value Added Services because the future of

the mobile telephony lies in Value Added Services.

Other thing Idea can do is to introduce attractive Value Added Service that are

possible at this point of time. 3G is almost reached and Airtel is starting IP TV. So

Idea can take this as an eye-opener. Idea can start applications like Mobile Magazine,

Mobile Learning, Mobile Marketing, Mobile Social Networking, Mobile Blogging

and Music Downloads etc. because these are very potential services which can

generate huge revenues for the company.

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Chapter 2

IntroductionStatement of Problem

The countrys mobile service providers have been adding a combined 6.5 million

subscribers every month, making India the fastest growing telecom market in the

world. But ARPUs (Average Revenue Per User) of Indian mobile companies, which

are already the lowest in the world, is continuing to head further south, even as

companies are registering a significant increase in their overall revenues. IDEAs

ARPU fell 1.6 per cent to Rs 317 from Rs 322 a month a subscriber in the third

quarter of 2006-07. However, compared with the corresponding quarter of 2005-07,

the figure fell a worrisome 15.1 per cent. This decline has become a trend now; it has

been declining continuously for past 3-4 years. So this is a cause of concern for the

company.

The ARPU (Average Revenue Per User) for the Indian Telecom Industry is

continually falling. The call rates in India are lowest in the world and therefore there

is a pressure on service providers to increase the ARPU because their profit margin is

decreasing continually. So they need to introduce other services and find out other

means to increase the revenue.

Explanation of the Problem

Every company needs to analyze the products that are major contributors of revenue

and profits. While most manufacturing companies look for the contribution from each

product segment, the service providing telecom companies search for the same nuance

in the average revenue per user (ARPU), which is indicative of the revenues that these

companies generate from each of its service offering like cellular mobile services,

dialup or broadband services.

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Idea Cellular has seen a steady decline in its ARPUs on account of increased

competitive pressures. A part of the fall in the ARPUs can also be attributed to the

reduction in regulatory charges like the revision in interconnection usage charges, the

reduction in access deficit charge (ADC) and also due to a shift in customer profile.

The company has over the years witnessed a marked increase in its prepaid customers

(as a percentage of total subscriber base), which has caused a reduction in its blended

ARPUs. However a fast paced subscriber addition and an increase in the minutes of

usage (MOU) per subscriber per month has led to an increase in the overall revenues

of the company. As it is explained below:

Idea Cellular: ARPU and MOU

ARPU (Rs per subscriber per month) FY03 FY04 FY05 FY06 CAGR

Prepaid 1330 1149 779 707 -19.0%

Postpaid 426 381 307 304 -10.6%

Blended 727 541 414 391 -18.7%

MOU (per subscriber per month)

Prepaid 414 583 463 523 8.1%

Postpaid 103 199 185 224 29.6%

Blended 207 279 248 289 11.8%Service Revenue (Rs m) 9,403 12,965 22,464 29,489 46.4%

Source:Company Prospectus

What is ARPU

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A cellular mobile service provider derives its revenues by way of tariff charges for

outgoing calls made by subscribers on its network. As such, revenue for a cellular

mobile service provider is simply a multiple of average revenue per subscriber per

month (ARPU) and number of subscribers. Let us now understand what determines

the ARPUs and subscriber base. Average revenue per subscriber per month, or ARPU,

is the amount of money that a cellular mobile service provider generates per

subscriber per month. It can be obtained by dividing the total wireless revenues by

number of subscribers and then dividing the output by number of months in a period.

To even out the volatility in ARPUs, if any, it is better to arrive at the figure by

averaging the wireless revenues and subscriber base for the latest two years. However,considering the rapid pace of subscriber addition for Indian cellular mobile service

providers, ARPU calculated as dividing the trailing 12-months wireless revenues by

latest subscriber base.

How are ARPUs calculated

ARPU is calculated as service revenue (excluding activation charges and

infrastructure sharing revenues) divided by the average number of subscribers for the

relevant period. ARPUs can also be calculated as minutes of usage (MOU) per user

per month multiplied by revenue per minute. In most cases, ARPUs are calculated for

a month.

Do MoU and ARPU grow or fall together

Growth in MoU does not necessarily increase the ARPU. Most of such growth is due

to reduction in cost per unit thereby encouraging usage but as the revenue per minute

is lowered, the ARPU does not grow at the same pace. In fact it has been observed

that ARPUs have been consistently falling in spite of double-digit growth in MOU.

Importance of ARPUs

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Tariffs and minutes of usage drive the ARPUs. The tariffs are representative of the

competitive pressure in the market, as increased competition will drive the tariffs

down to their more competitive levels. In certain cases, tariffs may also fall on

account of a reduction in the regulatory charges as levied by the regulatory body

(TRAI in this case). The minutes of usage are indicative of the usage of the service by

subscribers and in turn representative of the network utilization of telecom companies.

Thus, the ARPUs are an important tool for analyzing the subscriber and devising

strategies to maximize revenues through various tariff plans. The tariff plans are

framed in such a way that they appear attractive to new customers and also incentives

the existing prepaid customers to switch to postpaid tariff plans. This helps thecompany to maximize its reach with prepaid customers as also to convert prepaid

customers to relatively higher revenue yielding postpaid customers.

Lower ARPUs and margins

Idea has a lower ARPU compared with Bharti Airtel and Hutchison Essar. Though it

has a slightly higher ARPU than Reliance Communications', it takes a hit in its

operating profit margin (OPM). Idea has a lower OPM at 33.6% compared with

Reliance Communications and Bharti Airtel both of which have OPM of close to40%. The lower ARPU can be attributed to the company's (a) lower market share; (b)

absence in the lucrative Mumbai circle and (c) high share of pre-paid customers

(88%). The margin is lower due to the lower ARPU and the launch of three new

circles in the last year, which dragged down the OPM. Going forward, as the

operations in the new circles stabilise in the medium term, the OPM would stabilise

too.

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Chapter 4

Research Methodology

Collection of Primary Data

A systematic approach was followed to fulfill the objectives of this study. First of all,

the needs of the project were studied and on the basis of those needs a questionnaire

was formed. The data was collected from the Idea customers as well as the customers

of other service providers so that we could compare the services by Idea with its

competitors.

The objective of the questionnaire was to study the spending behavior of the telecom

users, to study for how long they stick to a service provider, also to find out the

customer priorities while buying the a new number.

The research design chosen was Descriptive Research Design because the survey was

conducted to get the customer insight and to know their preferences. Also it was to

find out perception about the service provided by telecom companies. So mainly it

was to describe the telecom market characteristics.

I did random sampling while conducting the survey. The survey was conducted in

Noida and Greater Noida region. A total of 400 telecom users were studied, and most

of them belonged to the youth category because my main objective was to find out the

spending habit of Indian youth. And the reason behind this was that its the youth who

is revenue generator today.

Collection of Secondary Data

The secondary data was collected to understand the market trends and forecast in

developed and developing countries. This data was mainly collected from the research

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companies sites on the basis of their market research. These trends then were

analyzed whether these can be applied by Indian Telecom players.

Chapter 5

Description of Current Situation

Industry Growth Drivers

Overall economic growth and continued development of the Indian economy

The buoyancy of the Indian economy has increased the purchasing power of

consumers. Disposable incomes have risen by a CAGR of 10% over the last ten years,

resulting in an increase in consumption expenditure. According to the National Center

for Applied Economic Research (NCAER), the number of households in the

middle income, high income and rich categories is expected to increase to

approximately 37 million, 21 million and 23 million, respectively, by financial year2007 from approximately 24 million, 14 million and 12 million, respectively.

Increasing Affordability

This significant improvement in affluence coupled with the growing working

population is expected to be one of the key drivers for increased mobile

telecommunication penetration in the future.

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Declining tariffs and reduced handset costs have enhanced subscriber growth

Tariffs have been declining over the past ten years. Handset costs have also decreased

significantly in recent years. This has reduced the entry barriers for new subscribers

and thus expanded the markets available to telecommunications service providers.

Fall in incremental capital expenditure per subscriber and economies of scale

Mobile operators in the Indian telecommunications industry have generally attained

the necessary number of subscribers to benefit from various economies of scale and to

negotiate better prices from network equipment vendors. As a consequence, as well as

because of significant subscriber growth, incremental capital expenditure per

subscriber is expected to fall in the future.

Increased regulatory clarity

Regulatory changes and refinements in recent years have brought greater clarity to

existing rules and procedures, which should enable operators to focus on improving

network quality and providing telecommunications services to subscribers under a

stable regulatory regime.

This situation should also make it easier for companies operating in the

telecommunications sector in India to raise finance and other funding on more

attractive terms given the greater predictability of the operational environment. Since

the regulatory framework is an evolving process within the industry, there remain

certain issues such as 3G Spectrum allocations and number portability which require

further clarity from the regulators.

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Corporate Profile

Idea Cellular Limited is amongst the leading mobile operators and currently operates

in 11 Circles which comprise one metropolitan Circle, three category A Circles, six

category B Circles and one category C Circle. In addition, it holds licenses for the

Metropolitan Circle of Mumbai and the category C Circle of Bihar. Its ranked

amongst the top three operators in six of the Established Circles. It is currently one of

the fastest growing mobile operators and has consistently grown in the Established

Circles and New Circles with a market share of Net Adds of approximately 16.7% in

the period between April and December 2006.

It is an experienced and well-positioned GSM service provider with original licenses

in seven of 13 Circles as a result of which it benefits from various incumbency

advantages. It has a history of expanding, integrating and rebranding Circles, as it did

with, for example, the Uttar Pradesh (West), Haryana and Kerala Circles. In

November 2002 it commercially launched in the highly competitive Delhi Circle and

has gained a market share of 11.5% as at December 31, 2006. It is well positioned to

capitalize on the growth opportunities in the Indian telecommunications market and

will be able to leverage its existing strengths in all 13 Circles and into additional

Circles where it commence operations.

It is now part of the Aditya Birla Group, which is sole promoter and is currently

amongst the largest business groups in India in terms of market capitalization. Since

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November 2005, companies belonging to the Aditya Birla Group have been major

shareholders and it has benefited from the Aditya Birla Groups strong and committed

support. Since that time it has invested over Rs. 25 billion in expanding and rolling-

out network in the Established Circles and the New Circles. Following this

investment, in the last nine months its subscriber numbers have grown significantly,

increasing by approximately 68.9% to approximately 12.44 million subscribers as at

December 31, 2006 from approximately 7.37 million as at March 31, 2006, and cell-

sites have increased to 8,600 as at December 31, 2006 from 4,763 as at March 31,

2006. As at December 31, 2006 its network covered 1,627 Census Towns and 1,980

other population centers. For the financial years 2005 and 2006, gross revenues wereapproximately Rs. 22.68 billion and Rs. 29.73 billion, respectively, and EBITDA was

approximately Rs. 8.29 billion and Rs. 10.86 billion, respectively. Its growth to date

has been the product of a combination of organic growth and acquisitions.

It is expanding its coverage in the Established Circles and the New Circles, and also is

pursuing new licenses to create a pan-India footprint. It has recently received License

for the Mumbai Circle and, through Aditya Birla Telecom Limited, License for the

Bihar Circle. The Mumbai Circle is attractive because Mumbai is the commercial

capital of India and also because of the community of telephony interests including

the benefit of traffic flows with other Circles, particularly Maharashtra, Delhi and

Gujarat Circles. It has also recently obtained an NLD license which will reduce

operating costs.

In addition, it has nine License Applications pending for further Circles which, if

obtained, will give complete access to the Indian market. The table below explains the

market share of Idea in respective circles:

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Idea expects to close the fiscal 07-08 with nearly 25 million users, an analyst

said. Ideas growth was stunted until June last year due to some differences between

joint venture partners the Tatas and Birlas. However, after the Birlas bought out the

Tatas, the companys revenues saw fast growth. In the nine months ended December

07, Idea earned Rs 3,000 crore in revenues and in the next three months, it made

another Rs 1,500 crore.

With rollouts in Bihar and Mumbai expected this year and incumbency

advantage in some key circles like Delhi, Idea is poised to grow fast. Entry into newer

circles and NLD operations will boost the topline in FY08, said another analyst.

Pune-based Idea, which listed on bourses in March 07, is the sixth largestTelco in India. Largest player Bharti Airtel, which offers services in all the 23 circles,

had reported revenues of $1.1 billion during the third quarter of FY07.

Products and Services

It offers pre-paid and post-paid mobile services in the Established Circles and the

New Circles under the brand names of Idea Chit Chat and Idea, respectively. It

seeks to identify new business opportunities and be the first mover amongst its

competitors for value added services (VAS). It was the first mobile operator to offer

an extended validity post-paid product, which now forms a sizeable percentage of its

post-paid base.

In addition to its core mobile voice services, it offer its subscribers features such as:

1. Easy to use missed call alerts;

2. GPRS enabled entertainment services like MMS, Video Tones, WAP,

Wallpapers, Java Games and Mobile Magazine;

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3. GPRS enabled information services like internet browsing, data cards and

mobile email;

4. Voice and SMS based entertainment services like Ring Back Tones,

Background Music, Voice and SMS Chat, Ringtones, Horoscopes, Expert

Advise and Subscription Services;

5. Call-forwarding (allowing a subscriber to divert incoming calls to another

telephone number);

6. Call conferencing (allowing a subscriber to speak to two or more persons

simultaneously);

7. Voice mail (allowing callers to leave voice messages for the subscriber);8. Regional, on-net, national and international roaming options for the

subscribers;

9. GPRS roaming available with key national and international operators; and

10. Fixed Cellular Terminal for corporate needs, GSM gateways, vehicle tracking;

and Automatic Meter Reading.

Awards and Recognitions

It has received several awards and acknowledgements, including:

1. An award at the GSM Association Awards ceremony in Barcelona in February

2006 in the Best Billing or Customer Care Solution category for its BillFlash service. Its the first, and remain the only GSM based service operator

in India, to win an industry-wide, international GSM Association Award;

2. Being cited as one of the top 20 companies to watch out for in 2007 in

Business Today. Business Today is one of Indias premier business news

publication; and

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Original licensee in seven of the Established Circles providing incumbency

advantages

It is the original licensee in seven of the Established Circles, namely the category A

Circles of Andhra Pradesh, Gujarat and Maharashtra and the category B Circles of

Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (west). Although initially it paid

higher fixed license fees, it believes that being an original licensee has enabled it to:

- reduce its capital expenditure and operating costs as it were allocated Spectrum inthe 900 MHz frequency band, which has allowed it to provide networks with a lower

density of cell sites than is required for services in the 1800MHz frequency band

typically made available to subsequent market entrants;

- access the early subscribers, who tend to be more affluent and typically have higher

ARPU;

- cater to a critical mass of subscribers, thereby making it harder for new operators to

enter the market and gain market share; and

- benefit from the 2% reduction in its license fees for a period of four years with effect

from April 1, 2004.

A national brand

It has sought to develop the Idea brand nationally to represent high quality customer

service and a wide variety of innovative products. It believes its brand gives it a

strong platform from which to market mobile services to new subscribers. As it

emerges as a national player, it have begun associating itself with visible and

prestigious events such as the International Indian Film Academy Awards, the Zee

Fashion Awards and the Idea News Headlines to give its brand national visibility.

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Critical mass of 12.44 million subscribers

It provides mobile services to approximately 12.44 million subscribers in the

Established Circles and the New Circles, as at December 31, 2006. It believe this

subscriber base enables it to realize significant benefits from economies of scale in

many aspects of its operations, such as equipment procurement, sales and marketing,

billing and customer service and support

Strong distribution channels

It has developed its distribution network to maximize the breadth and depth of its

distribution channels and the consequent ease of access to its pre-paid, post-paid and

corporate subscribers. As at December 31, 2006, approximately 88.0% of its

subscribers were pre-paid. These subscribers pay for mobile services by means of

purchasing pre-paid cards, which are sold through approximately 154,070 retail

outlets. These retail outlets are serviced through approximately 1,355,115 exclusive

distributors, many of whom have long-term relationships with it. The breadth of its

distribution network has grown by over 30% in the past year. In addition it operate

approximately 540 Idea n U and other showrooms which supplement its distribution

channels and provide customer service.

High quality network structure

Its GSM network is supplied by leading equipment suppliers such as Ericsson, Nokia

and Siemens who are at the forefront of GSM technology. In each of the Established

Circles and the New Circles, it has maintained a high degree of integrity on the

network architecture whereby elements of GSM equipment are largely supplied by a

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management structure and supportive relationship with the Aditya Birla Group

enables it to effectively manage a dynamic business and to respond quickly to rapidly

changing market situations.

Risk Factors

It faces intense competition from other operators

The competition in the Indian telecommunications industry is intense. It faces

significant competition from companies that have a pan-India footprint such as Bharti

Airtel Limited, Tata Teleservices Limited and Reliance Communications Ventures

Limited. Competition may affect its subscriber growth and profitability by causing its

subscriber base to decline and cause both a decrease in tariff rates and averagerevenue per user (ARPU) and an increase in Churn and selling and promotional

expenses.

It may be unable to manage its rapid growth

Idea has experienced significant growth in recent periods. Its total number of

subscribers has increased from 7.36 million as at March 31, 2006 to approximately

12.44 million as at December 31,2006. Based on statistics compiled by the Cellular

Operators Association of India (COAI) it acquired a approximately 5.08 million

subscribers in the last nine months, of which its records indicate approximately 97.0%

were prepaid subscribers.

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To meet anticipated growth in demand for mobile services it intends to increase the

capacity of the Established Circles and to continue to roll-out network in the New

Circles. It also plans to roll-out services in the Mumbai and Bihar Circles and to

operate its NLD license. It is actively seeking further licenses and has filed the

License Applications. There can be no assurance that it will be able to execute owes

strategy on time and within budget or that it will retain its subscribers on its network,

achieve the network quality, capacity or revenues or enroll the number of new

subscribers that it have planned.

The Churn rate in its networks is high increasing its subscriber acquisition costs

and resulting in the loss of future subscriber revenues

Churn, or subscriber attrition, is an industry term used to refer to subscribers leaving a

network. It calculate churn by dividing the total deactivations in a period by the

average number of subscribers for that period and dividing the result by the number of

months in the relevant period. Churn in mobile networks in India is high especially

among pre-paid customers. Its average monthly Churn was 6.2%, 7.3% and 6.2% for

financial years 2004, 2005 and 2006, respectively, comprising 6.7%, 8.2% and 6.4%

of pre-paid subscribers, respectively, and 4.6%, 4.4% and 5.3% of post-paid

subscribers, respectively. Its pre-paid subscribers accounted for approximately 75.7%

and 81.8% of its total end of period (EOP) subscribers as at March 31, 2005 and

2006, respectively.

Its revenues are derived solely from providing mobile services and its dependent

on four of the Established Circles for a significant proportion of revenues

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its subscribers (especially when compared to its major competitors) unless it continue

to have appropriate arrangements with other operators.

Chapter 6

Latest Market Trends in Developed Countries

Video driving mobile infotainment growth

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8. Satisfaction Level with Connectivity

Connectivity for Idea Cellular is not considered to be very good, but on this front Idea

has improved. But if we compare it with Airtel, its far behind. Idea has 61% users

satisfied whereas Airtel has 88% satisfied customers.

Satisfaction Level with Connectivity (Idea)

3% 15%

21%

46%

15%

Very Poor Poor Neutral Good Very Good

Satisfaction Level with Connectivity (Airtel)

0%0% 12%

55%

33%


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10. Customer Care Services

58% of the Idea customers are satisfied as compared to 64% of Airtel. Also 15% of

the Idea customers are not satisfied as compared to 12% of the Airtel. Both of these

have almost equal portion of neutral customers.

Customer Care Service Idea

3%12%

27%52%

6%


Customer Care Service Airtel

5% 7%

24%

52%

12%


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13. Promotional Offer

According to the survey 65% of the Idea users believe that Ideas promotional are

good as compared to 54% of Airtel user think that its promotional offer are good. 29%

of the Idea users are neutral as compared to Airtels 39%.

Promotional Offer by Idea

3% 3%

29%

50%

15%


Promotional Offer by Airtel

2% 5%

39%47%

7%


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Chapter 8

Conclusions

The reasearch shows that the Idea Cellular Ltd. has a low image among its own

customers. They are not fully satisfied with the service they are getting and customer

satisfaction is the base for any company to survive. The main reason for choosing a

service provider is connectivity and Idea is not meeting the expectations of the

customers on this front.

Idea is not able to retain its customers as compared to other service providers. The

churn rate for Idea Cellular is high and it has maximum of new customers as

compared to other service providers. And its a satisfied old customer who spends

more money than a new one. Monthly spending by Idea users is less than the other

players.

The future of the mobile companies lies in Value Added Services, these services will

be the revenue generator in the future. Idea customers pay more attention to Value

Added Service related messages than other customers. Unless a customer know about

something how can he use it.

Survey shows that the customer portion that doesnt use any VAS for Idea is very

large. The main VAS used by Idea as well as generally are Dialer tones and

Ringtones. The money spent on VAS by Idea customers is lower than the general

customers.

Satisfaction level with Price or Call rates of Idea users is high. Idea is positioned

among the user as a low price player and hence Idea is trying to penetrate the

customer base with lower prices. But even when its prices are lower than others

customers are not happy with it as compared to Airtel whose prices are higher and

customer are happy for the prices. The reason is that Airtel provides the value for

money, it provides connectivity whereas Idea has poor connectivity.

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Idea attracts new customers on the basis of new attractive scheme or promotional

offers, means on the basis of prices which is a poor way doing of business.

In terms of customer care service also Airtel and Hutch are above Idea. Idea is also

not a big Brand name as compared to others like Airtel and Hutch. So these things like

connectivity, customer care service and brand name stand for quality. And the

company which lacks these fields is considered poor.

The trends in developed countries show that the customers are demanding new and

new Value Added Services. As 3G is about to reach India so these high quality value

added services will no longer be out of reach of Indian Telecom companies. Mobile

sports is going to be a big start in Asia with Beijing Olympics.

Mobile Blogging is a very good application that is catching up very fast. Another

trend that is catching up is Mobile Magazine. In developed countries some magazine

publishers have begun offering mini-versions of their content via mobile phones.

Mobile marketing can be a good revenue generator for the telecom companies. It can

be one of the major revenue generator among value added services. And good news is

that people are more open to mobile ads. Successful will leverage mobile phone

technology to create deeper and longer-lasting customer relationship.

Mobile Learning can become a good value added service because unlike e-learning,

which is dominated by corporate buyers, mobile learning is being driven by

consumer, government, and healthcare buyers. A variety of new and enhanced m-

learning services cab be language learning, test prep, training podcasts, location-based

services and handheld continuing education content. Healthcare buyers are already

taking the benefits of m-learning in Europe.

But all these services can be delivered when a company retain its customers and

biggest loophole in retaining customer for Idea is its network. And network is the

foremost thing that customer wants.

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Appendix-1

Questionnaire

PART A

NAME _______________________________________AGE (a) 10-25 (b) 26-40 (c) 41 and aboveSEX (a) Male (b) FemaleINCOME (a) Up to 2 lakhs (b) 2-5 lakhs (c) 5 lakhs and above (d) N.A.PROFESSION (a) Service (b) Business (c) Student (d) Any other

PART B

1) Which companys telecom service you are using?a) Airtel b) Hutch c) Idea d) Reliance e) Tata Indicom f) Any

Other___

2) How long you have been using it?a) Less than 3 months b) 3-6 months c) 6-12 months d) More than 1

year3) What was the reason of choosing your present service provider?

a) Better Connectivity b) New Good Scheme c) Attractive Numberd) Brand Name e) Good Customer Service f) Call Ratesg) Value Added Services

4) How much is your monthly mobile bill?a) Less than Rs. 300 b) Rs. 300-500 c) Rs. 500-800 d) More than Rs. 800

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Provide their services at time they promise to do so.____

If a customer has a problem, shows a sincere interest in solving it.____

III. Responsiveness:

Personnel give prompt services to customers.____

Any queries at any point of day convenient to customer.____

IV. Assurance

Personnel at servicing outlets are courteous with customers

____ Have knowledge to answer customers questions.

____

V. Empathy:

Give individual attention and understand specific needs____

It keeps customers informed about services and schemes offered____

Documents

39261883 IDEA Project Dharmender