Lack of 5G is starting to hurt Vodafone Idea

5G India SUC Vodafone Idea
Image by Anton Medvedev | Bigstockphoto

The lack of 5G has started to hurt Vodafone Idea, particularly its subscribers’ per capita data consumption, which experts believe could result in high-paying customers jumping ship in the coming quarters to other telcos with 5G services.

Vodafone Idea’s per capita data consumption was 15.1 GB as of 31 March, 2023, while Airtel’s was 20.3 GB. Reliance Jio already leads the market with 23.1 GB per capita data consumption.

The cash-strapped telco’s per capita data consumption is expected to reach 20 GB over the next 12-18 months. In comparison, however, Airtel is estimated to hit 30 GB in that time, and Jio could easily surpass that mark, the Economic Times reported, citing several experts and market analysts.

Both Airtel and Jio have been aggressively rolling out 5G since October 2022, so both will see a proliferation in their respective 5G subscriber bases over the next few quarters. Meanwhile, the report added, both telcos aim to achieve extensive 5G coverage by March 2024, indicating that time is running out for Vodafone Idea to start its 5G campaign.

No 5G could mean churn and lower ARPUs

The report noted further that “lagging on the 5G rollout by more than three quarters as compared to its peers also means that Vodafone Idea stands to lose customers even after launching its own 5G” since its quality of service would likely be lower than telcos who have wider coverage and more experience running 5G.

Both Airtel (36.6%) and Jio (43.7%) continued to gain revenue market share at the expense of Vodafone Idea, whose market share had eroded to  under 20% by March 2023, BNP Paribas said in a report.

Apart from subscriber churn, Vodafone Idea could also see a slowdown in ARPU growth in the long run in the absence of 5G.

“Data consumption is key to improving ARPU in the long run. All telcos now offer free voice minutes with their plans. Data top-ups will be key in driving ARPUs while we wait for headline tariff hikes,” Pareekh Jain, chief executive of research firm EIIRTrend, was quoted as saying by the publication.

“After launching 5G, the network will take at least two quarters to settle. By this time, Airtel and Jio 5G networks would be running efficiently, meaning Vi could lose customers to peers because of poor 5G service as well,” Jain added.

Vodafone Idea refutes pundit predictions

Vodafone Idea has been struggling to raise funds through debt or equity sale, which has resulted in its inability to invest even in 4G expansion, let alone 5G.

However, the company’s chief executive Akshaya Moondra recently said during a recent earnings call that fundraising talks picked up pace in the last month after the conversion of AGR moratorium dues into equity by the Indian government and the return of Aditya Birla Group head Kumar Mangalam Birla to its board.

However, Mondra recently dismissed the views of market pundits and said that the company is not seeing any negative impact from the lack of 5G services on its business, given it had managed to moderate churn in Q4, a period when peers were aggressively pushing 5G.

“Over time, everybody will need to have a 5G offering. Now what is the depth and breadth of the coverage will have to be determined over a period,” Moondra said during the earnings call.

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