Vodafone Idea continues to dwindle, as rivals surge!, ET Telecom

From bad to worse, there seems to be no end to Vodafone Idea’s woes.

The situation has got to such a point that business continuity may become a challenge. The latest salvo has come from Indus Towers who has warned restriction of services to the struggling operator if the pending dues are not cleared.

If the restrictions are indeed imposed, the biggest losers will be its 228.33 million mobile users who could face disruption in their services. And this is bound to intensify the subscriber loss for the ailing telco.

According to the latest data from telecom regulator TRAI, Vodafone Idea lost 1.32 million million subscribers in the month of July. It has been losing out on its subscribers to rivals Bharti Airtel and Reliance Jio for more than a year now. In the same month, Jio added 3.9 million mobile users while Airtel added 1.51 million users, partly weighed down by sharp tariff hikes taken in its base prepaid rates.

Indus Towers, which has Vi as one of the main customers, has Bharti Airtel as the biggest shareholder with 47.95% and UK’s Vodafone Group holding 21.05%. Vi had sold its stake in Indus when the latter merged with erstwhile Bharti Infratel.

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

The fundraise plan by Vodafone Idea seems a distant dream, as the plan has been hanging fire for a few years. Vi has been struggling to pay its other vendors and statutory fees to the government. The telco’s distress though, has given a golden opportunity to rivals – Reliance Jio and Bharti Airtel who have been aggressively luring customers to their networks. Both have been rolling out 5G services across cities in a fast paced manner. Airtel plans to attract subscribers from Vi with a strategy to enhance its postpaid user base. Airtel’s focus on premium customers has driven strong average revenue per user (ARPU) growth in the last few quarters, even without tariff hike-related opportunities.

According to analysts, a near-term delay in tariff hike is likely to only strengthen Airtel and Jio’s pricing power and market share as it is likely to expedite the transition to a duopoly market by further deterring Vi’s fund-raise plan.

No wonder the fears of duopoly keep resurfacing.

The financial numbers for Vodafone Idea paints a grim picture. At the end of first quarter fiscal year 2024, it had Rs 2.11 lakh-crore net debt and a cash balance of Rs 250 crore. Its dues to banks and financial institutions stood at Rs 9,500 crore at June-end, of which Rs 6,826.6 crore is payable by June 30, 2024. Besides Indus, Vi needs to pay other vendors such as American Tower Corp (ATC), Nokia and Ericsson. The company’s chief executive Akshaya Moondra had recently mentioned that fund raising talks are progressing well but no deal has been closed yet.

Time is running out for Vi which was once the largest telecom player after the merger with Idea Cellular.