One million users lose Spice after Idea-Spice Deal

MUMBAI: Spice has lost nearly a million subscribers in the past two months after Idea Cellular announced the acquisition of the two-circle operator.

While over 0.35 million subscribers were knocked off the books in July, another 0.63 million gave up the connection in August. With this, the subscriber base of Spice now stands at 3.56 million. it had 4.54 million subscribers in June when the acquisition was announced.

Idea will now have lesser number of subscribers in its books than it must have anticipated at the time of Spice Acquisition. These subscribers were “cleaned up” to conform to the reporting standards adopted by Idea Cellular.

Most telcos remove a subscriber from list in the absence of any revenue generation for six months. However, Spice was following a more lenient criterion.

“This subscriber clean-up is in accordance with the reporting standards adopted by Idea cellular in terms of active and inactive subscribers,” said an analyst. “Most of the clean-up is over and Spice is expected to see subscriber net additions beginning September,” he added.

Idea, which has now rolled out in Mumbai and Bihar (including Jharkhand), is adding over 1 million subscribers every month. With the integration of Spice, its footprint will expand to 15 circles, including the lucrative service areas of Karnataka and Punjab. Idea paid Rs 77 per share and another Rs 19 per share as non-compete fee.

Spice is currently making losses. However, analysts expect that Idea will take not more than three-four quarters to turn around Spice and make it profitable in the two circles. “By acquiring Spice, Idea gets a kickstart in these two circles with a subscriber base of 3.6 million, equivalent to around 13% market share in both service areas.

Further, Idea’s operations in the 900Mhz band shall increase from seven circles currently to nine circles, facilitating scale economies and operational synergies resulting in lower opex and capex,” said the analyst.