The Indian telecom industry is facing a major crisis in the form of falling tariffs and increased competition, according to Vodafone India head Sunil Sood. Speaking at a press conference following the company’s fiscal fourth quarter results announcement, Sood said that current industry conditions make it difficult for operators to generate enough profit to sustain their operations and develop infrastructure.
He also said that the current economic environment has necessitated competitive tariff increases at intervals that are not too long or short. “We need to have a situation where we have a sustainable business,” he added. Explaining the reasons behind the fall in tariffs, Sood said that competition has increased due to the entry of Mukesh Ambani-owned Reliance Jio, whose free offers have not only hurt incumbents, but even its own unit Reliance Communication.
Vodafone Idea has had a history of being among the top five mobile service providers in India. Its brand is one of the most recognizable brands in India and they have enjoyed a very high sales volume, though, Vodafone Idea has seen a slight decline in its revenue as an overall telecom service provider. Vodafone Idea still holds 8.8% of market share as per the data by Telecom Regulatory Authority of India (TRAI) for March 2017, however it has dropped from 2.
Vodafone Idea’s total subscriber base was at 1092.2 million by the end of December 2018, with a net addition of 7.85 million users. The market share of the company has increased by 0.10% in Q3, 2018 and stands at 8.80%. This is the first increase since June quarter, 2017 for Vodafone Idea. The company’s total revenue from operations in Q3, 2018 increased by 3.2% to Rs 19,941 million and operating profit decreased by 0.4% to Rs 2,308 million over the same period last year.
Telecom Regulatory Authority of India (TRAI)
Vodafone Idea has been active in the overseas market with its business model. Vodafone Idea Ltd. has managed to earn an internal revenue of Rs 4.044 billion ($64 million) and is ranked 18th among the top Mobile service providers in India. Vodafone Idea’s international operations are headquartered in New Delhi, India and operates under the name of Vodafone Idea Global Pte Ltd, a subsidiary of Vodafone India.
Vodafone Idea has a network in India with over 3.5 million mobile subscribers. It operates as a mobile virtual network operator in the voice call segment of the market, serving customers through its own GSM infrastructure, and offers roaming services to its international customers on other networks such as Airtel and Tata Docomo. Vodafone Idea sold 4G spectrum to Jio which was launched just before the Vodafone report came out.
Vodafone Idea has built its network by procuring licenses from the Government of India in the following spectrum bands:
Vodafone Idea, Vodafone India, and Vodafone India’s mobile virtual network operations subsidiary, Vodafone Idea Global Pte.Ltd., are currently embroiled in a legal dispute with Reliance Communications (RCom) over a consortium license to operate an LTE network in Delhi and Greater Mumbai.
Vodafone Idea provides services across the country, including key areas of North East and Andaman & Nicobar Islands. Vodafone Idea has a high speed internet connectivity facility and offers 4g service in 97% of India’s cities with over 20,000 towns and villages. In addition to this, Vodafone Idea has also upgraded their network to VoLTE, which is fully compatible with Reliance Jio customers.
VIL had 24.38 crore subscribers as of March 31, 2022, of which 11.81 crore were 4G users
Vodafone Idea is present in Phase II and Phase III of the Indian mobile broadband spectrum auctions. It had earlier won bids for 20 megahertz (MHz) of spectrum in the 1,800 MHz band across eight states, including Delhi, Rajasthan, Uttar Pradesh East and Uttar Pradesh west. It has also won 4G spectrum in the 2,300 MHz band in four circles – Madhya Pradesh, Andhra Pradesh (circle share), Bihar and Odisha.
Vodafone Idea is offering free unlimited 4G Data to the first five million users of Jio post the launch of its services. This is a test offer for the user base and it will be withdrawn after the user base crosses five million. The company quoted an example when they had allowed other users to use their 3G networks after Jio launched services, resulting in less data usage as compared to using 4G.
Vodafone Idea has in total spent on capital expenditure of Rs 4,701 crore in FY17 and it is likely to increase this number further to Rs 9,000 crore for FY19. It will invest Rs 6,000 crore during the current fiscal year. Capital Expenditure by Vodafone Idea for FY17 grew to Rs 4,701 crore from just Rs 1,527 crore in FY16.
Vodafone Idea is one of the few telecom operators that offers unlimited voice, video and text when purchased with a bundle plan. Vodafone has always been in the forefront of voice over internet protocol (VoIP) and converged classic voice-data services. This bundled contract can be effectively used to allow free calling and data usage in selected countries or by customers who wish to use it as an effective tool to share Internet data across devices.
Vodafone Idea has signed a memorandum of understanding with Facebook for the launch of Free Basics in India. Vodafone India was officially established between the International Telecommunication Union – Telecommunication Standardization Bureau, Vodafone Group Plc and Hutchison Whampoa Ltd. Vodafone Idea is an indirect and wholly owned subsidiary of Vodafone Group Plc and is registered as a local service provider under the Indian Telegraph Act, 1885.
VIL said its priority remains on driving ARPU improvement
The company said it was expecting to garner ARPU of Rs 130 in this fiscal year, up from Rs 124.5 in FY16. It had invested Rs 125 crore in its 4G network, which would be further augmented by another Rs 1,835 crore this fiscal – a figure VIL said would be sufficient to meet anticipated demand from its network.
Vodafone Idea said that it was looking to improve its customer base and the overall experience in delivering a better service to the customers. It has set itself a target of reaching 1500 million subscribers by 2021 and leading in Jio’s market share. The company aims to improve its network quality by launching new technologies like VoLTE, also called 4G HD voice, or HD Voice. According to reports 2018, Vodafone is working closely with Nokia Networks on the deployment of 4G HD Voice.
Vodafone Idea reported a net loss of Rs 5,177 crore for the fourth quarter ended March 2017. In absolute value terms, it’s higher than the previous two quarters combined. It was also Vodafone’s biggest quarterly loss in the 21-year history of the merged entity, taking cumulative losses since inception to Rs 49,000 crore.
Industry needs to raise tariffs at regular interval
Vodafone Idea has been scrutinised heavily for allegedly not providing enough spectrum in the auction of 2G spectrum. Cellular Operators Association of India (COAI) President Rajan S Mathews said that since Vodafone Idea did not win any spectrum, they should have borrowed spectrum from another operator to provide services. According to an IDC study, Vodafone India has even less airwaves than new entrant Reliance Jio Infocomm, which got a fresh licence at no charge.
Vodafone Idea Limited is headquartered in Gurgaon, Haryana. It has a network of over 3.5 million mobile subscribers. It operates as a mobile virtual network operator in the voice call segment of the market, serving customers through its own GSM infrastructure, and offers roaming services to its international customers on other networks such as Airtel and Tata Docomo.
Vodafone Idea offers free unlimited 4G Data to the first five million users of Jio post the launch of its services. The company quoted an example when they had allowed other users to use their 3G networks after Jio launched services, resulting in less data usage as compared to using 4G.
Vodafone Idea Ltd. (VIL) and Aditya Birla Retail Limited (ABRL) have decided to merge Vodafone India and Aditya Birla Mobile Services Ltd. to create India’s largest telecom operator with a combined customer base of over 400 million, revenues of more than INR 1.7 lac crore, as well as a 40% share of the overall mobile telephony market in India.
Telecom industry needs to raise mobile tariffs regularly
On 3 April 2018, Reliance Jio Infocomm Limited (RJIL) has entered into an agreement to acquire India operations of Idea Cellular, a subsidiary of the Europe’s third largest telecom operator Vodafone Group. As per the terms of the agreement, RJIL will acquire all issued and outstanding shares (excluding treasury shares), in exchange for payment of Rs 7,345 crore. As per the deal, it would acquire a majority stake in Vodafone India.
Vodafone Idea Limited is a mobile telecommunications service provider in India. It provides wireless, fixed line services and broadband services across the country. VIL offers voice services, including voice over IP (VoIP), local and national video calls, SMS and message service and multimedia messaging service (MMS).
The company has been criticised by several organisations and personalities for its failure to achieve the set target of 25 million customers. According to a report in “Outlook”, VIL spent more than 43% of its telephony revenue on mobile subscriber services in the fourth quarter, compared with 26% a year ago. It spent 43.4% of its telephony revenue on mobile services, a category that accounts for 80% of total revenue.
Vodafone Idea Limited is a subsidiary of the Vodafone Group, the world’s third-largest mobile operator with over 220 million subscribers in more than 30 countries. The head office of Vodafone India is located in New Delhi. The company was incorporated as Vodafone India Pvt Ltd on 23 April 1994 and was listed on the Bombay Stock Exchange and National Stock Exchange of India (NSE) in 1995. The name Vodafone was adopted after it became a publicly listed company.
The Vodafone Group merged with Hutchison Whampoa in December 2007, and in January 2008, the company changed its corporate name to Hutchison 3G (India) Pte Ltd. On 6 May 2010, the company changed its name to Hutchison 3G (India) Ltd. in order to conform with the TRAI’s licence conditions for mobile telephony operators.
In April 2018, the Vodafone Idea Limited announced a merger with Idea Cellular that would create India’s largest telecom operator with a combined customer base of over 400 million, revenues of more than INR 1.7 lac crore and a 40% share of the overall mobile telephony market in India. The merged entity will be called ‘Vodafone Idea Limited’ and listed on Bombay Stock Exchange and National Stock Exchange of India (NSE).
Vodafone Idea is giving its first 5 million users unlimited high speed 4G data for a period of 90 days. After this period Vodafone Idea will give unlimited 3G/2G data. The number of Vodafone Idea stores had reached to over 6000 as on 31 March 2018 which makes it the highest in India. As per the sources, The retail expansion and high-quality customer service is the major focus area for VIL.
Vodafone has made many firsts in the mobile telephony arena.
When Vodafone India got merged with the Idea Cellular, the company became the first company to launch an all-IP network, connecting all service centres via a single IP backbone. The core networks of Vodafone and Idea are connected by optical fibre, which enables them to use the same VoIP service through Vodafone’s IP gateway in New Delhi and also allows for two-way traffic between them.
With its merger with Idea Cellular, Vodafone Idea will now have access to a pan-India 4G spectrum portfolio of 43.4 MHz which will help the company to compete with new entrant Reliance Jio. Vodafone Idea has been ranked India’s most trusted brand 2018 by Trust Research Advisory (TRA). According to TRA, Vodafone Idea has been first in the overall ranking and also in the “Best Mobile Network” category.
VIL joined hands with National Stock Exchange of India Limited (NSE) to launch its initial public offering (IPO). Vodafone Idea Limited’s IPO was the highest ever issue in the Indian capital market in 2016, raising INR 150 billion (US$2.5 billion). This included an offer for sale by Vodafone Group (25% stake) and by other shareholders of Rs. 30bn and an offer for sale by Aditya Birla Group (which holds 35.
Vodafone Idea Limited launched its services under the Vodafone brand in India and operates both 3G/4G services.
Vodafone Idea Limited operates under the brands of Vodafone and Idea Cellular. Vodafone is one of the leading global operators with a strong presence in Europe, Central & Eastern Europe, Middle East and Africa, while Idea is among India’s largest wireless telecommunications networks with operations in India and Bangladesh. The brand names represent the rich heritage of each operator.
Vodafone Idea has over 6,000 retail outlets operating across the country with a focus on customer care and better service quality. It has 4,700 retail touch points in taking Vodafone services to customers across India. Vodafone has distribution agreements with leading multi-brand and single-brand retailers.
Conclusion
Vodafone Idea Limited is listed on the Bombay Stock Exchange and National Stock Exchange of India (NSE). Vodafone Idea Limited is a subsidiary of Vodafone Group, the world’s 3rd largest mobile operator with over 220 million customers in more than 30 countries. The head office of Vodafone India is located in New Delhi.
Vodafone Idea is giving its first 5 million users unlimited high speed 4G data for a period of 90 days. After this period Vodafone Idea will give unlimited 3G/2G data. The number of Vodafone Idea stores had reached to over 6000 as on 31 March 2018 which makes it the highest in India. As per the sources, The retail expansion and high-quality customer service is the major focus area for VIL.
As per TRA analysis of the Indian telecoms industry, there were two operators who were able to accurately identify customer intent, and hence customer satisfaction, across all elements of an analysis. These were Vodafone Idea Limited and Reliance Communications (RCom).
TRA has also said that Vodafone Idea Limited has been ranked first in India’s most trusted brand 2018. In the ‘Best Mobile Network’ category, it was identified as being ranked first.
The Indian telecom industry experienced exponential growth in the years 1994-2012. At the same time, owing to the liberalization of India’s telecommunications sector, it was opened up to private companies to operate as a telecom operator. Not only did it encourage competition but also encouraged entry of foreign companies into India.
The Indian Govt. has steadily been reducing regulatory strictures and dominance of government owned companies in various industries. The liberalization of the telecom sector has been instrumental in ushering in a new era for mobile telephony across India. The liberalization of the telecom sector has also encouraged greater private participation in the sector.
The advent of 3G technology led to a new era, wherein mobile operators were able to provide faster connectivity with higher speed data services, thus widening access to internet and information among all sections of society in India. The rise of devices such as smartphones and tablet computers have also changed the dynamics of the telecommunication sector. This has led to a large number of individuals now being able to access the internet from their mobile phones, on go.
