Obviously, Idea broke quite a few rules to get where they are today. But to openly disclaim industry standard metrics(as their new MD did in the FY11 concall) is surprising. He reiterated that in the 1Q'12 call stating that In the last earning call I had mentioned Idea as a company, had upgraded its competitive ability by challenging the standard telecom market review parameters like subscriber count, ARPU and ARR. We instead, have focused on five critical internal parameters namely absolute gross revenue, cash profit and EBITDA, active subscribers, total minutes of use and mobile number portability.
Below is an analysis of these parameters, and comparing them against the ones they replaced
- absolute gross revenue:- This metric was supposed to replace ARPU(scaled up). It does focus the attention on volume as opposed to pro rate metric, but can't see the difference really
- Cash profit;-Telcos use FCF, but Idea seems to prefer cash profit. Again, little difference
- EBITDA :- This is one measure used by all and sundry to dress up profits, and Idea is no exception.
- Active subscribers:- Here, Idea does a good thing of ignoring idle subscribers, and focussing on actual users. But here, definitions are key. Reliance considers even 1 use/months as 'active use', whereas Idea's definition is unknown to me.
- Total minutes of use:- Again, this seems inferior to metrics like 'Paid Minutes of Use' as RCOM uses. And then, AGR/Total Minutes of use=ARPU. Why trash a metric whose numerator AND denominator you are anyway using
- MNP:- Erosion/Addition of net subscribers is a good measure of competitive standing and quality perception, and Idea does well to focus on this metric.But then, so does every one else.