Vodafone Idea India (VI) is fighting to be a force in the Indian telecom marketplace. VI is still looking for investment to prosper as it has lost money in every quarter since August 2018. The VI subscriber base is now a target to be raided.
The #3 carrier competes with giants Reliance JIO and Bharti Airtel – and has been losing. VI is a prime target for competitors to scoop up subscribers. VI’s 4G subscriber base grew 300000 to 122.9M while the overall base declined from 225.9M to 221.4M during calendar 2Q2023. VI’s active subscribers (a smaller number than total subscribers) are less than 90% and dropping. JIO is capturing new subscribers at twice the rate of Airtel. VI has not captured global investors’ imagination when seeking outside capital.
VI has government debts of Rs1.33 lakh crore for radio spectrum bids and Rs 6680 crore for AGR (adjusted gross revenue) fees (USD$16.8B). This week VI will pay radio spectrum fees to the Department of Telecommunications in an installment of Rs1680 crore (USD$205M) funded by new investment. For context VI spent 450 crores (USD$54.2M) on increased assets and lost Rs 7840 crore (USD$942M) during calendar 2Q2023.
Indian consumers have long used different carriers’ plans to their advantage. Two-SIM card smartphones have been popular with consumers allowing choice between carriers and plans moment-to-moment. VI’s 4G is competing, in many places, with increasing 5G deployments by competitors while not having the capital to aggressively invest in its own network. The VI 4G LTE network has less bandwidth for streaming. Consumers will continue to vote with their money and VI will continue to lose subscribers unless value can be increased.
The 5G rollout by VI has been delayed without a solid geographic schedule. Unlike JIO and Airtel, VI had been partnered with Chinese Huawei for 4G. Huawei and ZTE have not been accepted for 5G equipment certification in India. Nokia and Ericsson are reported as unwilling to extend major credit to VI as there were previous major payment problems for Huawei equipment. VI will continue to struggle to obtain financing for major 5G network completion even as competitors enlarge and enhance their 5G networks.
For context, VI customers average 16.8GB of data per month, Bharti Airtel 21.1GB, and JIO 23.1GB. ARPU for VI is Rs 139, Reliance JIO Rs 180.5, and Bharti Airtel Rs 200. VI customers are less active, use less data, while paying the least with a low rate of increased revenue.
JIO Cinema and Bharti XStream are creating consumer demand for Reliance JIO’s and Airtel’s subscriptions. VI does not have the deep pockets to compete with content. To stream ICC Cricket, VI consumers need to add a Disney+/Hotstar+ subscription (like BSNL and Tata) in some form. JIO Cinema’s huge bid for IPL Cricket likely moved millions of subscribers to JIO. VI’s ongoing debt and investment restriction has meant they aren’t able to aggressively compete with content for retaining or expanding their subscriber base.
The Indian government wants more external investment to keep three major national 5G carriers as spectrum fee discussions for 6G start public discussions. For an Alien Invader to participate in the Indian market will take major policy and opportunity changes as even the three large incombents compete where VI loses huge amounts of money.
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