The second wave of Covid 19 in India has lead to chances of cities getting locked down again. With the ongoing night curfew and many other restrictions to follow, analysts have predicted that the telcos are likely to experience a slowdown in mobile user addons in the April-June quarter. To know how is it going to impact the telcos, read ahead.
Vodafone Idea Would be the Worst Impacted
Analysts have predicted that Bharti Airtel and Jio can manage to counterbalance the potential slowdown in subscriber addition by accumulating higher data revenue and expanding their home broadband user base as people are going to spend most of their time at home. On the other hand, Vodafone Idea (Vid might go through a difficult time due to the huge user losses in the quarter; considering it is already struggling.
Vodafone Idea (Vi) already needs to allocate resources to pay off its debt towards the annual instalments of its adjusted revenue dues which is over Rs 50,400 crore. Now, due to the lockdown, Vi will be forced to increase its tariff as it needs higher Average Revenue Per User (ARPU) to survive and to boost the confidence of investors because they need to not only retain the funding but also need further capital flowing into the balance sheet. In between all this, they also need to sizeably strengthen its 4G network in order to retain customers and also to survive in the competition with Jio and Airtel.
According to a report by ET, BofA securities stated that rising cases leading to rising restrictions in India would impact net subscriber addition for the telcos along with consumer sentiment. Thus the potential tariff hike now needs to be further pushed back. BofA also stated that Vi would be the most vulnerable considering that it is already making losses.
Delay in the tariff hikes for about three to six months can put a further strain on Vi's finances. It is likely to broaden its losses and can also lead to a loss in Average Revenue Per User (ARPU) said, Nitin Soni.
It will certainly be interesting to see how well will Vi tackle this situation considering they already have a weak balance sheet.
