Batata to Idea: A Brand new image that clicked CO ROSE FROM OBLIVION DUE TO STRONG MARKETING INITIATIVES

Idea Cellular has won ET's Emerging Company of the Year award for 2009. Till about eight years ago, its corporate name used to be the butt of jokes.As a three-way joint venture between the AV Birla Group, Tata and AT&T, it was called Birla-AT&T-Tata.But wags reduced it to Batata and the name stuck. Batata was hardly a dignified name for a company that boasted of three corporate giants as promoters and prided itself on being a rising star in the telecom industry.In giving the award to Idea, the jury clearly recognised the Idea management's success in creating a strong business model and a strong brand.As the company gets ready to now become the fourth-biggest wireless operator and overtake public sector giant BSNL, this historical oddity is hardly ever going to register on its radar, let alone draw an embarrassing grimace from its top managementThe circumstances have clearly changed. Far from being a laggard with no clear vision and strategy,
Idea Cellular - the name was changed in 2002 - is today a success story in the telecom industryIdea has emerged as the fastest-growing listed telecom company, thanks to strong marketing and brand initiatives, advantages of spectrum and a clear-eyed management focus on growing and expanding its subscriber base.Idea is likely to overtake BSNL and emerge as the fourth-largest cellular operator with about 50 million or more users. Since its IPO in 2007, its market cap performance is second only to Bharti Airtel and is better than Reliance Communications. While Bharti's m-cap in July 2007-July 2009 fell just 5%, Idea's has fallen about 29%. The m-cap of RComm has crashed 47%. Idea's minutes of use were at 402 in January-March 2009 against 372 for the Anil Ambani company. This is significant, considering that Idea was a relatively unknown brand till about three years ago, while firms such as Bharti and Reliance were already well established. There are reasons behind Idea's strong performance. The spectrum band it uses, the 900 Mhz, is considered very conducive to subscriber growth and gaining market share.The 900 Mhz spectrum is able to provide at least 50% more geographical coverage than the 1,800 Mhz and capex and operating costs are much lower. Also, expanding in rural markets in the 1,900 Mhz spectrum tends to be quite difficult. Idea is among the few telecom companies to have added more subscribers in rural areas.


NEHA VERMA
PGDM 3rd Sem