Vi Could See Higher Churn in Postpaid User Base Due to Lack of 5G: Report

Vi is the largest postpaid mobile service provider in India. That is something not easy to achieve and wouldn't have happened if the customers didn't believe in its services. Further, postpaid users are more loyal than prepaid users.

Highlights

  • The growing 5G network coverage of Reliance Jio and Bharti Airtel could potentially accelerate the churn of high-end postpaid subscribers from Vodafone Idea.
  • The brokerage firm suggests that the differential in 5G coverage may entice users to switch to the competitors' networks.
  • In the first quarter of FY24, Reliance Industries Limited (RIL) management reported that Jio's 5G signal already covers over 90% of census towns.

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Vodafone Idea

According to BoFA Securities, the growing 5G network coverage of Reliance Jio and Bharti Airtel could potentially accelerate the churn of high-end postpaid subscribers from Vodafone Idea to the top two telecom giants. The brokerage firm (via ET Telecom) suggests that the differential in 5G coverage may entice users to switch to the competitors' networks.




In the first quarter of FY24, Reliance Industries Limited (RIL) management reported that Jio's 5G signal already covers over 90% of census towns. The telecom giant has deployed around 115,000 5G sites nationwide, which equates to approximately 700,000 5G cells.

Jio has committed a massive $25 billion capex to achieve a pan-India 5G rollout by December 2023, having initiated the deployment in October 2022. As Jio and Airtel expand their 5G networks, Vodafone Idea could face increased pressure to retain its high-end postpaid user base.

Read More - Vodafone Idea Most Affordable Family Plan for Two People Explained

All's Not Lost for Vi

But there are more things to consider. Vi is the largest postpaid mobile service provider in India. That is something not easy to achieve and wouldn't have happened if the customers didn't believe in its services. Further, postpaid users are more loyal than prepaid users. Then, 5G was already there in the Q4 of FY23, but Vi was actually able to bring down its blended subscriber churn rate from 4.4% to 3.8%. That's a big improvement in a quarter.

Furthermore, there's the fact that people don't really know what to do with 5G. It is all just speed at the moment, but its use cases on a phone are very limited. Vodafone Idea has reportedly asked the government for an extension of the minimum rollout date for 5G and would look to cover a wide part of India altogether whenever it tries to launch it. The telco is currently testing its 5G networks in Pune and Delhi.

Reported By

Tanuja is a passionate technology and telecom buff who has been following the telecom industry for several years now.

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