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BL Research Bureau IFC (International Finance Corp), the World Bank’s investing arm, has given a shot in the arm for Idea Cellular to rollout its services in Bihar by extending a loan of $100 million.

This follows a $640-million investment from Providence Equity in May this year, in a subsidiary of Idea Cellular, which owns the Bihar licence.

The Bihar circle may generate a low average revenue per user, so Idea would have to play the volumes game there.

It may help that Bihar has just about 8 per cent mobile penetration, providing a substantial market opportunity on the back of lower tariffs.

The IFC investment is also directed towards introducing pocket public calling offices or PCOs.

This may widen the user base in the bottom-of-the-pyramid category, which may not be able to afford phones.

All this would entail substantial capex in network capacity expansion to allow more talk-time. These investments, therefore, provide the necessary funding in what may be a long-drawn break-even cycle.

Idea had recently started its services in Mumbai and has added over 17,000 subscribers in 11 days in August.

No serious tariff cuts vis-À-vis competition there has been announced. Being a high ARPU circle, as and when Idea gains a reasonable market share, realisations may be higher.

These two circles may provide a blend of volumes and margins for Idea.

More Stories on : Stocks | Overseas Borrowings | Telecommunications | Idea Cellular Ltd

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