Idea Cellular, India’s third largest telecom operator by revenue, reported a shrinkage in the area and population covered by its 2G network.
The number of villages covered by Idea’s 2G signals decreased by 4,196 to 3.89 lakh by March end from 3.93 lakh at the end of December.
This was associated with the reduction of 876 towers in the company’s 2G network in the three months.
With this, the percentage of population covered by the company’s GSM signal has fallen to 82.3% from 82.8% at the end of December.
Almost all the deactivated sites seemed to have been taken on lease from tower company Indus as the number of towers taken on lease from Indus fell by 973 in the three months from January to March.
It is not known whether the shrinkage in the network area was achieved for bringing down costs, or in preparation for the merger between the company and rival Vodafone India.
2G coverage can also go down when a company switches off 2G signals to re-use the spectrum for other services like 3G or 4G.
However, this is unlikely to be the reason in case of Idea as such transitions are done in congested metropolitan areas, where you typically do not find any villages.
UPDATE: The company confirmed that it was ‘exiting’ unprofitable areas.
FIRST FOR THE COMPANY
The shrinkage has come as the company reported a fall in its profit in the quarter due to higher competition.
The company has been pushed into losses for the last six months due to strong competition from Reliance Jio and Bharti Airtel, and has cut expenses to save cash.
It brought down its network expenses by 5% in the three months from January to March, even as it continued to add more and more 3G and 4G towers.
This is possible as rural 2G towers powered by diesel cost more money to maintain compared to 4G and 3G base stations, which are often added to low-cost towers such as those in metros.
The company has already announced that it will be able to reduce operating costs as it merges with Vodafone India.
Instead of having two independent towers or networks covering the same region, the companies could simply choose to support each other’s subscribers using a single network, and switch off the other. However, such an arrangement would typically not bring down the area of coverage, as seems to have taken place this time.