Vodafone Idea (Vi), the third-largest telecom operator in the country, is planning to hike tariffs again later in the year. But the telco has been losing users at a rapid pace. It is worth noting that the number of 4G subscribers has grown, but the growth rate is just not enough. Vi wants to improve its average revenue per user (ARPU) so that it can increase its overall revenues from mobile operations.
However, the thing is, the telco can still do that by simply removing inactive users from its network. This is what Jio did. Removing inactive users would result in a direct ARPU jump. Not just that, right now, Vi should only focus on improving networks by getting funding from an outside investor. The telco is already getting a lot of help from the government. It should not waste the opportunity to gain a larger subscriber market share by offering lower tariffs than competitors.
India is a price-sensitive market more than quality seeking market. People want good services but at the lowest tariffs. Vi should bank on this and offer lower tariffs and get as many people as possible on board. This is what Jio also did. Low ARPU with a larger scale of revenues would still mean a lot of money.
Vodafone Idea is Giving Equity to Govt and Waiting for External Investment
The CEO of Vi, Ravinder Takkar, had recently said that they are very close to securing a Rs 20,000 crore investment. They are just waiting for the government to complete the takeover of stake in the company. For the unaware, Vi is offering the government a stake in the company against interest dues worth thousands of crores. Govt doesn’t want to play any role in decision-making. The decision to take equity came only with the intention to help the telco with its liquidity issues. It will be interesting to see what Vi really does here.