"Prices need further uptick to generate reasonable returns and support future investments," Vodafone Idea (Vi) said in its Investor Presentation. Before the recent tariff hike in July 2024, the last such hike occurred in November 2021. Currently, tariffs in India remain lower than those in comparable global markets. Considering inflation, prices need to align with rising costs, Vi emphasised.
Also Read: Vodafone Idea Prepaid Plan Revisions: Hero Becomes SuperHero With Extended Benefits
Tariff Revision Strategy
Vodafone Idea believes there is significant potential for Average Revenue Per User (ARPU) growth, as usage has increased multi-fold while ARPU has not risen proportionately. "Customers' ability to pay higher tariffs is already established," the company said. In line with its tariff revision strategy, Vodafone Idea recently launched 'Vi SuperHero' packs, which offer unlimited data from 12 am to 12 pm, an upgrade from the earlier 'Vi Hero' packs that provided unlimited data from 12 am to 6 am.
Investments Across India
Vi highlighted that its 17 priority circles account for approximately 98 percent of its revenue. The company presented a CAPEX plan of Rs 50,000–Rs 55,000 crore over the next three years. This investment will focus on expanding 4G population coverage in these priority circles, providing 4G services on the sub-GHz 900 MHz band in 16 circles for better coverage and experience, enabling 5G launch and expansion, and increasing overall capacity to meet rising data demand.
FY25 Achievements
Vi spent over Rs 2,000 crore as CAPEX during H1 FY25 to increase 4G data capacity by 14 percent and extend 4G population coverage to an additional 22 million people. For H2 FY25, the company anticipates CAPEX of Rs 8,000 crore.
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Existing Network Built on 5G-Ready Architecture
The company underscored its strategic approach to adopting advanced 5G technology and cost-efficient solutions stating, "Late adaptation of 5G leading in embracing latest advanced technology products and cost efficiency."
According to Vi, 90 percent of its TDD radios are 5G-ready, and all new baseboards are 5G-capable. The operator has met the Minimum Rollout Obligation (MRO) for 5G and achieved an E-band MW backhaul throughput of 9.8 Gbps in trials. Additionally, Vi said it successfully tested its AirFiber home broadband solution with multiple partners.
On the transmission side, 90 percent of optical endpoints have been upgraded with 10G bandwidth capability. This improvement supports the phased rollout of 5G, enhances data traffic handling, reduces latency, and accommodates increased bandwidth demand.
Also Read: Vodafone Idea Tops 4G Network Experience in India: Opensignal
Vi 5G
Currently, 5G services are available in select areas, including Pune (Shivaji Nagar, Maharashtra), India Gate/Pragati Maidan in Delhi, Perungudi and Nesapakkam in Chennai, Tamil Nadu, and Kot Kalan in Jalandhar, Punjab. According to the website, Vi postpaid users subscribed to the REDX 1101 plan are eligible for Vi 5G, while prepaid users must have an active Rs 475 recharge pack.
Strong Promoters and Support from GOI
Vi reaffirmed its strong promoter backing from the Aditya Birla Group and Vodafone Group. "In addition to being the policy maker and largest creditor, Government of India now owns around 23 percent equity stake post the conversion of debt representing NPV of interest arising from deferment of AGR and spectrum instalments into equity," the company added.
As of September 30, 2024, the UK's Vodafone Group holds a 22.6 percent stake, the Aditya Birla Group holds 14.8 percent, and public shareholders hold 39.5 percent following a Further Public Offer and Preferential Issue.
Vi also emphasised a favourable market structure, providing a clear runway for market repair. Its strategy as the third-largest operator in the world's second-largest telecom market includes focused network investments in 17 priority circles to drive coverage and capacity expansion, initiatives to improve ARPU and customer retention, and a focus on business services through Telco-to-Techno transformation and strategic digital collaborations.
Also Read: Vodafone Idea Selects Tejas Networks to Scale Up Backhaul Network for 4G and 5G Deployments
Market Initiatives to Drive ARPU Growth
Vodafone Idea says it is prioritising the expansion of 4G penetration and upgrading existing 2G subscribers. The operator aims to enhance the proportion of high-ARPU customers by delivering a superior network experience. Vi noted that 79.1 million of its subscribers are non-4G users, representing an opportunity to upgrade 39 percent of its subscriber base to 4G.
Vi highlighted the customer ARPU (excluding M2M) for Q2FY25 as Rs 166, noting, "ARPU improvement for 13 consecutive quarters driven by price increase and customer upgrades, which in turn has supported revenue growth despite subscriber churn." Vi further stated,"ARPU growth in line with other operator benefiting from subscriber upgrades," while acknowledging that the 4G subscriber base has been impacted by the recent tariff hike.
OTT Services
Vi relaunched its Vi Movies and TV OTT app in March 2024 as a paid subscription service offering multiple OTT platforms and TV channels under a single plan. Targeting smart TV households, the app now features over 18 OTT partners and provides access to 350+ TV channels.
Customer Support Enhancements
Vi is leveraging AI-enabled chat services to improve customer experience. Additionally, its dynamic IVR system provides customers with tailored menu options based on recent transactions and activities, the company stated.
Definitions of ARPU, 4G subscribers
According to Vi, as per Q2FY25 report,
ARPU (Average Revenue Per User): Is calculated by dividing services revenue (exclusive of infrastructure, fixed line connectivity and broadband and device revenues) for the relevant period by the average number of subscribers during the relevant period. The result obtained is divided by the number of months in that period to arrive at the ARPU per month figure.
Customer ARPU (Excluding M2M): Is calculated as services revenue less M2M revenue for the relevant period is divided by average number of Total subscribers less average number of M2M subscribers during the relevant period. The result obtained is divided by the number of months in that period to arrive at the customer ARPU per month figure.
4G Subscriber: Any subscriber with data usage of more than 0KB on 4G network or VoLTE usage.
Data Subscriber: Any subscriber with data usage on the network of more than 0 KB.
