With IBM, Idea is trying to drive down the revenue share component as it has more than met the subscriber numbers promised in the original deal, while it is asking GTL Infra to lower tower rentals that are now higher than the current market rate due to the gradual escalation in the past five years, the two said.
Idea is trying to cut costs as profitability is under pressure with high airwave and licence fees, imposition of charges by the Department of Telecommunications, and cut-throat competition that has kept call rates on the decline for over half a decade.
Idea Cellular signed an outsourcing deal with IBM in 2007, with the clause that the contract could be extended and renegotiated at the end of the first five years.
The person explained that the original $700 million (approximately Rs 3,700 crore) value in 2007 was based on a per subscriber revenue share, which the company is now trying to lower as it has added more subscribers than it has estimated in the year of signing the contract.
Since then, Idea Cellular has expanded its network from just 11 service areas to an all-India network of 22 service areas. The company's subscriber base touched 121.6 million this March from 14.6 million in April 2007. "Negotiations are still preliminary, but we should be able to lower the share that goes to IBM to some degree," said one of the two persons.
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