Vodafone India (VI) is an expansion by Vodafone to build margins and brand value in a fast growing global market. The competitive landscape in the Indian communications markets has become fiercely competitive. VI is living with the competition using compelling content, low cost pricing plans, and high-performing 5G deployments. EkaLore's previous segment looked at current performance at VI. This release looks at the options and choices for strategies for VI to become successful.
To improve VI must solve key problems:
1) Retain and expand subscribers instead of being a key target to get customers from
2) Invest in competitive technical features bringing options to marketing and the brand
3) Build sufficient investment funds and cashflow to be competitive
Each of these key problems has strategic and tactical choices and consequences.
Advantages for VI include:
A) Governments want to retain a multi-carrier marketplace for many reasons
B) Consumers are not yet locked in and the marketplace can shift
C) 5G applications are still emerging with expanding usage a market force
VI has disputes and continued growth in liabilities to critical operational partners and suppliers. The 35.8% ownership of VI, by the Government of India, is also a caution to foreign direct investment or financing vehicles.
Indus Towers took a financial precaution in January 2023 against outstanding liabilities from VI. Continuing negotiations and payments have not cleared all past due fees. Indus Towers’ revenue is about 40% from VI. A context for the deferred capital investment in 5G by VI are the actions of its competitors. Indus Towers had deployed 340000 5G sites with a rate of 7000 new sites per week in August 2023. Indus Towers had 204212 total towers for the September quarter. Market competition from Airtel and Jio was responsible for the large number of 5G sites with increasing rural deployments.
The Indian Government has made clear that deep-pocketed Chinese suppliers will not be considered “trusted sources” for equipment in the core 5G networks. Huawei had been VI’s choice for a 5G technology trial. ZTE has supplied upgrades and updates to the existing VI fiber network though no core 5G network equipment. Supplier financing possibilities are reduced further with Nokia and Ericsson’s reported decisions not to extend further financing to VI. Nokia has been the key 5G supplier to Airtel and Jio. Nokia recently announce 14000 employees will lose their jobs. Ericsson has a 2023 goal of an 8500 employee headcount reduction. The enterprises are making it clear there were no resources to materially expand credit to VI. Negotiations are rumored with OpenRAN suppliers and Samsung for 5G capability and capacity. Samsung announced 3Q2023 earnings in its key semiconductor products had dropped 80% over 3Q2022. It would not be likely Samsung would agree to extend substantial credit to VI under the current uncertain conditions. VI needs to establish a firm capital base to attract and establish a working partnership with a strong core 5G network supply chain.
VI’s options and choices are limited until a capital fund-raising of Rs 20000 crore (USD$2.4B) becomes finalized (likely in 4Q2023). Continued losses in 5G could be countered with marketing and product investment. Accelerating a timeline for 5G deployment will also require additional capital investments. As competitors Airtel and Jio are still aggressively courting VI’s customer base the viability of a delayed investment strategy is in doubt. Increasing costs of global investment capital also toughen the business case for large investments in a declining provider. Airtel and Jio are using content, critical global partnerships, and expanding into adjacent marketspaces to make their case for expansion to the consumers. VI’s capacity is in doubt to co-invest, deploy resources to widen market access, and still satisfy trailing liabilities and debt.
Vodafone wanted to apply its capital, know-how, and business strategies to make money and build its global brand in India. As an Alien Invader into VI there were lots of potential advantages. Competitors had their own playbooks with competition for radio spectrum (and high costs), lower prices (as the move to Internet from just voice services), and aggressive marketing (to prepaid, post-paid, and multi-carrier customers). Results have narrowed potential advantages and choices in strategies and tactics.
Vodafone has recently concluded a deal to unwind Spanish operations. Not all of Vodafone’s investments have happy endings. The story of Vodafone as an Alien Invader into the Indian telecommunications market continues. Not all invasions are successful and some continue to bring headaches to the best of strategies and plans.
For more analysis and other releases on Vodafone VI see
For more looks at Alien Invaders and how new strategies can make a difference to you please contact us at
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