Indian IPO

All details about Hot Indian Primary Market.

Tuesday, February 06, 2007

Idea's market share stands at 17.79%, ranks at No 3

Aditya Birla group company, Idea Cellular, is entering the capital market with an initial public offering, IPO, aggregating Rs 2125 crore, of equity shares of Rs 10 each, for cash at a premium to be decided through a 100% book-building process.

The price band for the issue has been fixed at Rs 65-75 per share.

Aditya Birla, chairman, said in the Idea Cellular IPO conference, “Currently there are 15 crore mobile subscribers in India and government projected this figure to touch 50 crore subscribers by 2010.”

He also pointed out on three drivers for Idea, which raised the market share to 17%:

Brand new handset – Mobile handsets are available at Rs 1200-1400, which is less than the cost of a bicycle.

Cost of ownership – The person, who has a salary of Rs 5000, spends Rs 2.5% of its salary on Mobile.

Tariff is lower in India as compared to other parts of the world.

Idea is a GSM player and currently has licenses for 11 circles and will soon add 2 more.

Its three circles are positioned at rank No 1 and two circles are at rank 2.

Aditya Birla Group holding in Idea stood at 65.93%.

He also said, "Idea has 12.44 million subscribers as of December 2006. For the nine month ended December revenues was of over Rs 3,000 crore.

New NLD licence will help upgrade infrastructure, he said.

Sanjeev Aga, managing director of Idea Cellular, with the help of the following tables explained the company’s market share in India and its subscribers base.

Idea subscriber position

Year Circles Subscribers
2002 5 circles 1 million
2004 8 circles 4 million
2006 11 circles 12 million

8 Established circles – competition analysis

Company 31-Mar-06 31-Dec-06
Reliance 21.5% 20.5%
Bharti 18.2% 19.1%
Idea 16.5% 17.79%
Hutch 15.8% 16%
BSNL
&MTNL 17.3% 15.2%
Tata 10.2% 11.3%

3 New circles Overview (31-Dec-06)

State Launch Mkt share Subscribers Mobile Penetration
Date
Himachal Pradesh Sep 06 1% 11000 17.2%
Rajasthan Oct 12 2.5% 161000 10.4%
UP (E) Nov 01 2.3% 208000 7.2%

Best name in vendors list – Siemens, Ericsson, Nokia

Market share growth

March 06 June 06 Sep 06 Dec 06
16.56% 16.9% 17.6% 17.7%

12.4 million subscribers – CAGR 86% in 4 years.

Nimesh Kampani of JM Morgan Stanley (book running lead manager), said that, "The Indian Telephony Industry is growing 94% per annum."

Idea Cellular IPO’s price band is available at 21-29% discount to EBITDA of Bharti. Its current market cap is at USD 3.4 billion, he said.

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