Vodafone Idea’s decline continues as rivals rise!, ET Telecom



To make matters worse, Vodafone Idea’s troubles are showing no signs of ending.

The situation has reached such a stage that business continuity can become a challenge. The latest warning comes from Indus Towers, which has threatened to ban the struggling operator’s services if pending dues are not paid.

If the restrictions are indeed imposed, the biggest loser will be its 228.33 million mobile users, who may face disruption in their services. And this is sure to increase customer losses for the ailing telecom company.

According to the latest data from telecom regulator TRAI, Vodafone Idea has lost 13.2 lakh crore customers in the month of July. For over a year now, it has been losing customers to rivals Bharti Airtel and Reliance Jio. In the same month, Jio added 3.9 million mobile users, while Airtel added 1.51 million users, partly due to sharp tariff hikes in its base prepaid rates.

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Indus Towers, one of whose main customers is Vi, has Bharti Airtel as the largest shareholder with 47.95% and UK’s Vodafone Group holds 21.05%. Vi had sold its stake in Indus when Indus merged with its predecessor Bharti Infratel.

With no 5G services in its kitty, continuous subscriber loss, no capital expenditure on network expansion, the sinking boat of Vodafone Idea has found no buyer despite the government taking substantial equity in the firm.

Vodafone Idea’s fundraising plan seems to be a distant dream, as the plan has been in limbo for a few years. Vi is struggling to pay statutory fees to its other vendors and the government. However, the telco’s crisis has given a golden opportunity to rivals – Reliance Jio and Bharti Airtel, which have been aggressively attracting customers to their networks. Both are rapidly starting 5G services in cities. Airtel is planning to attract Vi customers with its strategy to increase its postpaid user base. Airtel’s focus on premium customers has driven strong growth in average revenue per user (ARPU) over the last few quarters, even without opportunities related to tariff hikes.

According to analysts, a near-term delay in tariff hike is only likely to strengthen the pricing power and market share of Airtel and Jio as it is likely to accelerate Vi’s transition into a monopoly market by further disrupting Vi’s fund-raising plans. Is.

It is no wonder that fears of monopoly keep cropping up again and again.

Vodafone Idea’s financial numbers paint a grim picture. At the end of Q1FY24, its net debt stood at Rs 2.11 lakh crore and cash balance at Rs 250 crore. Its dues to banks and financial institutions stood at Rs 9,500 crore at the end of June, of which Rs 6,826.6 crore is to be paid by June 30, 2024. Apart from Indus, Vi will have to make payments to other vendors such as American Tower Corp (ATC), Nokia and others. Ericsson. The company’s chief executive Akshay Mundra recently mentioned that fund-raising talks are going well but no deal has been finalized yet.

Time is running out for Vi, once the largest telecom company after its merger with Idea Cellular.

  • Published on October 7, 2023 at 07:00 PM IST

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