Vodafone Idea (Vi), the third-largest telco in the country has big moves to make. One of those is 5G. While the telco continues to improve 4G coverage and capacity, there's no doubt it can't ignore 5G. Where, Reliance Jio and Bharti Airtel have achieved nationwide 5G coverage, Vodafone Idea is just getting started. This doesn't mean that Vi can't make a difference here. The important thing for the telco will be to be extremely competitive with 5G. What does that mean? It simply means come out with more aggressive offers like bundling 5G with lower cost plans than Jio and Airtel.'
Vodafone Idea has already started testing 5G in Mumbai, and a commercial rollout is expected this month. The company has alread confirmed that in April 2025 it will jump to more cities with its 5G networks. The telco's aim is to roll out 5G in cities or circles where most of the 5G phones and high-paying customers are. This would make Vi's approach more cost effective and efficient in comparison to Airtel and Jio.
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Vodafone Idea Needs to Add More 4G/5G Users
One of the things that could happen as Vi improves on 4G and starts rolling out 5G is the addition of new 4G/5G users. These are the premium and high-paying customers that Vi is in need of. The telco will be able to improve its average revenue per user (ARPU) as well as overall revenues and margins.
After the tariff hikes, the telco's speed of 4G/5G subscriber addition has dipped signficantly. It is expected to pick up again. One thing that goes well for Vi is that there's no strong fourth competitor. Once users are tired of consuming Airtel and Jio's services, they will ultimately have to move towards Vi. But the same is for the Vi long-term users. They will eventually move out to Jio and Airtel in search of better services.
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The telco has scaled its capex levels signficantly after raising funds. There are plans to raise more funds via debt in the next three years. Vi could definitely turn things around, especially as the government seems to be in support of the telco. The next big thing for Vi's turnaround would be what happens with the AGR (adjusted gross revenue) dues payouts. Will the government extend the moratorium or will Vi need to incur huge payments every year very soon. This will only be clear in the coming months. Stay tuned until then.
