Himanshu Kapania brought Idea Cellular among top 3 operators

The telecom industry and AV Birla Group credit Idea's performance to Kapania, who people inside the company know as an operations guy with an elephantine memory, who is very good with numbers, and is able to take an analytical yet distanced view of things.

About Himanshu Kapania

Kapania has a few role models. He says he learnt telecom regulatory affairs and policy from his predecessor Aga, who also taught him to be a risk taker. From the Ambani brothers, especially Mukesh, he learnt project management and how to scale business (he worked at Reliance Communications for three years before what is his second stint at Idea). "As a leader he is much focused, and he is not threatened by people with good ideas," says Rajan Mathews, Director General of lobby group Cellular Operators Association of India. Mathews, as CEO of a joint venture among the Tatas, Aditya Birla Group and AT&T of the US that later morphed into Idea, had hired Kapania as a deputy general manager in 1998/99. "When [Kapania] was the chairperson of COAI, the telecom sector was facing huge regulatory issues. He was astute in focussing on one or two things - like the pricing of spectrum and its availability," adds Mathews.

Idea's Chief Technology Officer Anil Tandon, who has known Kapania since the late 1990s, says his boss is very good at planning and understanding, and has a great knowledge of the telecom network. When the Delhi circle was launched in early 2000s, Kapania, Tandon remembers, would sit every evening with a map of the company's cell sites. After he took charge as MD, he did the same with the new 2G and 3G sites on the Idea network - the only difference being he sat with the country map - and nixed under-utilisation of the network's sites that was as much as 25-30 per cent.

A CALL TO THE VILLAGES

Idea has had a chequered past. It started as a joint venture between Birla and AT&T. Tata joined later, making it a three-way venture and giving it the ungainly acronym of BATATA. By 2006, both AT&T and Tatas exited, and Birla decided to carry on with the business. In 2007, Idea was the fifth among five private players in the market then and that, too, with only regional operations. Kumara-mangalam Birla had said he would exit all businesses where the company was not in the top three.

That itself set the target for Kapania. "In every business plan we have shared with him, we have overachieved. And we have also achieved his goal of being in the top three," he says. Idea is third behind Bharti Airtel and Vodafone India. It was under Aga that Idea became a national player. He took the company from a 2.5-million subscriber base to 80 million in 2011. His successor has kept the momentum: Idea has about 144 million users today.

But that's just one part of the story. Kapania's success lies in his shifting the focus to rural India and continuing to bet on voice services when rivals focused on mobile data as their growth engines. He looked for pockets where voice offerings were still underpenetrated. In 2011, Idea's presence was only in 80,000 villages. It now covers 350,000 villages. While the industry on an average has two of five customers in India's villages, Idea has 57 per cent from rural India, which contributes to 60 per cent of its revenue. "We chose a different battle ground, and we showed that it is possible to make profits from rural markets," says Kapania.

Nothing is off bounds for the father of two, not even Maoist-controlled areas in Chhattisgarh, Maharashtra and Jharkhand. When an earthquake hit the Kutch region in 2012, Kapania was there the second day, staying for another two. "We have seen cyclones and floods. If you are a nuts and bolts person, you cannot sit in Mumbai and direct your people," he says.

Infrastructure, critical for rural expansion, was expensive. About 40 per cent of the new sites came up in rural India. Idea has 134,000 base stations, which at 80 per cent of the number for Vodafone India and 70 per cent of Bharti Airtel is a high number juxtaposed with their respective revenue numbers. The backing of the Aditya Birla group, as also periodic capital raisings - be it from the equity markets or partners such private equity firm Providence Equity Partners and Axiata Group, formerly Telekom Malaysia (one of Asia's largest telecom companies) or institutional placements and, of course, debt - have kept the expansion going.

TIGHTEN THE NUTS

In Aga's time, Idea was broadly structured around two hubs: South and West headed by Kapania and North and East run by Ambarish Jain, who is now Idea's Deputy Managing Director. Jain remembers that during Aga's time the moves were more strategic, like tying up with Bharti Airtel and Vodafone India to form Indus Towers to share infrastructure or contract IBM as the information technology vendor.

Jain says that Kapania made sure that the company's investments are more productive. One big overhaul he put the company through was its distribution channels. Earlier, when there were less than 10 circles or service areas, each was handled by one distributor. As the circles increased, the same distributors ventured into newer ones. The distributors gained even if they stretched themselves thin but efficiencies dropped, as they were servicing a larger geography with the same resources and deployed multiple layers of sub-distributors.

Kapania realised this could not continue. He created something billed the "direct distribution system". "You can't keep changing structures, so it's important to do it right the first time," says Jain. Kapania removed the middle layer and created only one layer of distributors between the company and the retailer, so that processes were more transparent. Kapania then copied the model in 300,000 villages. There he created what is called "Son of Soil", where a local businessman was appointed distributor. Idea's distributor base, in three years, went up to 30,000 from 7,000, and the network services 1.5 million retailers across the country.

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