Vodafone Idea Prepares for 5G Rollout Amid Competitive Pressure

Vodafone Idea plans to launch 5G services soon, as it faces subscriber losses and increased competition from Reliance Jio and Bharti Airtel.

Kumar Mangalam Birla, chairman of the Aditya Birla group, announced in an interview with CNBC-TV 18 that Vodafone Idea will soon introduce its 5G services, though the exact timeline remains undisclosed. Vodafone Idea, struggling financially, has fallen behind rivals Reliance Jio and Bharti Airtel, which have been actively expanding their 5G networks across multiple cities.

Industry experts have noted that Vodafone Idea’s delayed rollout may lead to further loss of subscribers. In January, Reliance Jio and Bharti Airtel added 1.65 million and 1.28 million customers, respectively, while Vodafone Idea saw a decline of 1.35 million subscribers.

Vodafone Idea recently made headlines for paying only 10% of its January-March quarter license fee, requesting additional time from the government to pay the remaining 90% in installments by July 31. Currently, telecom companies pay 8% of their adjusted gross revenue as a license fee to the government.

A report from a domestic brokerage last month predicted a bleak future for Vodafone Idea, including the possibility of closing down due to increased competition. The analysts anticipate that tariff hikes will only occur after the general elections in June 2024, and without these increases, Vodafone Idea may struggle to invest in 5G services, leading to subscriber erosion and complicating capital-raising efforts.

Kotak Institutional Equities’ report suggests that the long-feared “duopoly” scenario, with only Reliance Jio and Bharti Airtel remaining, may be on the horizon. Presently, the well-funded Jio is aggressively competing with Airtel, as both companies aim to attract premium subscribers. The report estimates that Vodafone Idea faces a cash shortfall of INR 5,500 crore over the next year and that a delay in tariff hikes or fundraising could result in the company closing its doors.

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