Vodafone Idea Showed Good Recovery in Urban Markets

Vodafone Idea might be able to increase its ARPU with tariff hikes, but if the telco keeps losing subscribers, its RMS would lower in the medium-term.

Highlights

  • The prepaid tariff hike has raised concerns for a higher than usual subscriber churn rate for Vodafone Idea.
  • Vodafone Idea needs to go aggressive on expanding network coverage.
  • Vodafone Idea (Vi) was able to recover in the urban markets in September quarter due to which the telco’s revenue market share (RMS) steadied.

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Vodafone Idea

Vodafone Idea (Vi) was able to recover in the urban markets in the September quarter, due to which the telco’s revenue market share (RMS) steadied. According to an ET Telecom report citing TRAI data collated by ICICI Securities, Vi had reported a steady RMS of 18.6% in Q2 FY22. The analyst said that Vi showed good recovery in all the metro and A circles (except Andhra Pradesh).

The rise in revenues followed after the telco had removed its base prepaid plan of Rs 49, leaving users no option but to recharge with the Rs 79 plan at least to get voice calling services.

Vodafone Idea Tariff Hike Might Help Further

The prepaid tariff hike has raised concerns for a higher than usual subscriber churn rate for Vodafone Idea. However, if the telco can retain users and start adding new ones soon, its revenue market share should rise further. Along with the RMS, Vi is likely to see its average revenue per user (ARPU) rising further.

Vodafone Idea needs to go aggressive in expanding the network coverage. The telco didn’t have a strong cash flow over the last few years and has lost millions of customers due to the inability to invest in networks. With the relief package in place and possible fundraise from the promoters and outside investors, the telco might soon be in a position to invest in 4G networks.

Vodafone Idea might be able to increase its ARPU with tariff hikes, but if the telco keeps losing subscribers, its RMS will lower in the medium-term. It is unclear as to when Reliance Jio will move ahead with the tariff hikes. The later Jio announces prepaid tariff hike, the faster Vodafone Idea, as well as Airtel’s customers, will port out to Jio. Looking at the current prepaid tariffs offered by Airtel/Vi and Jio, there’s a stark difference where Jio’s plans look more appealing.

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