Vodafone Idea (Vi) is facing challenges in rolling out 5G services and subsequently falling behind its competitors.
The Indian mobile network operator is experiencing difficulties in securing funding for investing in 5G equipment and infrastructure, leading to a sharp drop in its stock prices.
Vi’s inability to raise funds has put it in a precarious financial situation, which could lead to a potential duopoly between Bharti Airtel and Reliance Jio, says GlobalData.
Shri Charan Padala, Principal Analyst in the Thematic Intelligence team at GlobalData, comments: “Vi is struggling to attract external investors, and the company has cited delays in converting dues to equity as one of the reasons. The company owed over $7 billion adjusted gross revenue related dues to the Indian government, which have now been converted to equity.
Despite this, Vi is yet to secure fresh investments, which has put it at a disadvantage compared to its competitors. The company’s brand perception and customer loyalty have been impacted as customers in India prioritize reliability and efficiency when selecting a telecom operator.”
If Vi fails to secure funding, it could jeopardize the company’s future in the Indian telecom market, and the lack of competition could negatively impact consumers.
Padala adds: “The Indian government may need to intervene to ensure that there is healthy competition in the telecom market and that consumers have access to high-quality, affordable services. To realise the broader benefits that the telecom sector provides to other sectors, the survival of Vodafone Idea is necessary to avoid a duopoly in the Indian 5G market.”
Bundled offerings could drive differentiation in terms of non-price factors. Following successful fund raising, Vi can offer data with several dimensions like voice, SMS, and content at a much more effective price.
Padala concludes: “Vi could monetize some of its non-core assets such as towers and datacentres to raise additional funding for its 5G deployment. While Vi’s funding struggles pose significant challenges, there are opportunities for the company to secure proper funding, expand operations and then capture a greater share of the market. The Indian telecom market’s direction will be defined by the cumulative impact of several factors such as government policy, consumer demand, and the pace of innovation and competitiveness among the different telecom operators.”