Can VI (Vodafone Idea) Compete With The Airtel-Jio Duopoly?

Ever since Airtel-Jio duopoly rolled out 5G services in 2022, VI continued to lose its shares. How many shares did it lose? You ask. Well, around 19%! This fall has been really huge ever since Vodafone and Idea combined with positive hopes for the future. 

To tackle this, VI planned to raise Rs.18,000 crore and Rs.25,000 crore through FPO and debt respectively.

However, the FPO opened last week and witnessed a lack of enthusiasm because the investors were uncertain about the profitability of VI.

All these facts boil down to the question- Can VI (Vodafone Idea) compete with the Airtel-Jio duopoly?

Let’s find out!

(A) Current Scenario: VI vs Airtel vs Jio

First of all, let’s compare certain factors of all these three companies. It will give a brief idea about the challenges faced by VI from the Airtel-Jio duopoly in India!

The reason behind the declining market share is inadequate expenditure on networking. Experts say that it will help cover more areas with 4G and stop losing too much market share after getting money for spending on improvements, but there will still be a big gap in 5G coverage.

(B) Challenges faced by VI from Airtel-Jio duopoly

Here are the key challenges faced by VI due to the duopoly of telecom titans i.e. Airtel and Jio-

(B.1) Subscriber Base Decline

Over the last six years, VI has lost over 198 million subscribers, reducing its base from 418.7 million in 2018 to 219.8 million in 2023. In contrast, Airtel has been gaining subscribers since 2020 and has even outpaced Jio in yearly acquisitions. In 2023, Airtel and Jio had 574 million and 470.29 million subscribers respectively. Thanks to their seamless 4G and 5G network services.

VI’s CEO recently admitted that the lack of 4G coverage has been the greatest factor behind their subscriber loss. If not upgraded the 4G infrastructure promptly, VI’s subscriber base may decline to 13.2 million in FY24.

(B.2) Financial Woes & Debt Burden

VI is facing some big money troubles. The telecom company owe a lot of money, about Rs. 2.14 lakh crore, but they only have about Rs.318.9 crore in cash. Their bank debt is less than Rs.4,500 crore. But that’s not all. They also have to pay nearly Rs. 70,000 crore for something called adjusted gross revenue (AGR) dues when the time comes.

Things might get even tougher after the second half of FY26 when they have to start paying back even more money for AGR dues and for using certain airwaves, which are like highways for data. The company also owes the government around Rs.2.15 lakh crore. Right now, the government owns about 32% of the company, but that might go down to 24% soon. It’s a tough situation for them.

(B.3) Average Revenue Per User (ARPU)

As you can see in the table given in the previous section, the ARPU of Vodafone keeps in declining with Rs.145 average revenue per user. On the other hand, Airtel and Jio enjoyed the ARPU of Rs.286 and Rs.181.7 respectively in the last fiscal year.

(B.4) Spectrum Holding

VI has more spectrum than Jio but still faces traffic challenges. Airtel, despite having fewer holdings, performs better in terms of traffic. Reason? Most of its spectrum towers i.e. Indus Towers work on sharing the spectrums with different telecom companies.

Hence, VI is making efforts to enhance its coverage and services post-merger, it remains an underdog against the Airtel-Jio dominance.

Note: Since we are talking about Airtel and Jio, you may wonder which one is doing better out of the two. Don’t you? If yes, then go through the following articles.

• Airtel vs Jio Detailed Comparison: Which one is doing better?
• Jio Fiber vs Airtel XStream – Which One Is Faster & Better?

I’m sure your doubts will be cleared after reading the above articles.

(C) Strategies: How can VI compete with Airtel-Jio Duopoly?

In this section, we will look into the strategies that VI (Vodafone Idea) could consider to compete with Airtel and Jio. You must note that some of the strategies are already opted by VI and are currently executed-

(C.1) Network Expansion & Quality Improvement

• Infrastructure Investment: VI should focus on improving its network infrastructure, including expanding 4G coverage, enhancing data speeds, and ensuring seamless connectivity.
• Quality of Service (QoS): Consistent QoS is crucial. VI can invest in better equipment, optimize cell sites, and address network congestion.
• 4G Coverage Expansion: VI has been investing in expanding its 4G coverage to reach more areas. For instance, they’ve focused on rural and semi-urban regions where Airtel and Jio may have a weaker presence.
• Network Optimization: VI has worked on optimizing cell sites, reducing congestion, and improving data speeds.

(C.2) Pricing & Tariffs

• Competitive Pricing: VI can strategically price its plans to attract and retain subscribers. Offering value-for-money plans can help regain market share. Therefore, VI introduced competitive pricing for its plans. For example, they offer affordable data packs with attractive benefits.
• Customized Bundles: Tailoring plans to specific user needs (data, voice, content) can differentiate VI from competitors. Hence, VI provides customized plans based on user preferences. For instance, they offer separate data and voice packs to cater to different needs.

(C.3) Content Services

• VI Movies & TV: VI partnered with content providers to offer exclusive streaming services. Users get access to movies, TV shows, and original content.
• Health Services: VI launched health-related services, including telemedicine and health-tracking apps. In other words, Vi 5G is powering L&T’s Smart & Connected Health Solution.
• Value-Added Services: Offering additional services like cloud storage, gaming, or health apps can enhance VI’s appeal.

(C.4) Customer Experience Enhancement

• Responsive Customer Support: VI should prioritize prompt and effective customer service. Happy customers are more likely to stay.
• Digital Channels: VI revamped its mobile app and website for better user experience. Customers can manage their accounts, pay bills, and get support online.
• AI & Chatbots: VI implemented AI-driven chatbots to handle customer queries efficiently.

(C.5) Strategic Alliances & Partnerships

• Infrastructure Sharing: VI collaborated with other telcos for infrastructure sharing. This reduces costs and improves network reach.
• Joint Ventures: Exploring partnerships with tech companies or startups can lead to innovative offerings. For instance, VI tied up with over-the-top (OTT) platforms to offer bundled content services. It means that you can access premium content of different OTT platforms ( Disney+ Hotstar, Sony LIV, Eron Now, ManoramaMAX, etc.) through Vi Movies & TV subscription plans.

(C.6) Financial Restructuring

• Debt Management: VI must address its debt burden. Negotiating with lenders and restructuring debt can stabilize finances.
• Capital Infusion: Encouraging promoters to invest more capital is essential for long-term viability. VI has already received the approval of raising Rs.2,075 crore from promoter entities by issuing preferential shares.

(C.7) Spectrum Utilization

• Efficient Spectrum Usage: VI should optimize spectrum allocation and utilization to improve network efficiency. It can effectively utilize Indus Towers of which VI owns 21% shares. 
• Acquiring Additional Spectrum: Participating in spectrum auctions to acquire more bandwidth can enhance VI’s capacity.

(C.8) Rural and Semi-Urban Markets

• Focus on Underserved Areas: VI can target rural and semi-urban regions where Airtel and Jio may have a weaker presence.
• Localized Marketing: Customizing marketing efforts for specific regions can resonate with local audiences.

(C.9) Innovative Offerings

• IoT Services: Exploring the Internet of Things (IoT) services can open new revenue streams.
• 5G Preparedness: As you know, the subscriber base and profitability of Airtel and Jio boomed due to its 5G services. Hence, VI should prepare for the 5G rollout to stay competitive in the future.

Last but not least, a fresh brand identity can help shed negative perceptions associated with VI. The Vodafone-Idea should communicate its strengths and commitment to customers transparently.

You must not forget that these steps are ongoing, and VI needs to upgrade itself continuously to stay competitive in the dynamic telecom market!