Vodafone India’s Postpaid Subscriber Base Likely to Go Down as Jio Enters the Segment

With Reliance Jio eyeing the high APRU customers using the latest Rs 199 postpaid tariff plan, the second largest telecom operator in the country, Vodafone India is finding themselves in a tough spot. To give you a context of what is conspiring after Jio’s blow to the telecom market, it is enough to understand that yet again in the fourth quarter of 2017-18 Vodafone India saw a decline of 4% in its postpaid user base which now stands at 14.93 million. This news comes up as the merger of Idea Cellular and Vodafone India is already along the way and is expected to be finalised in the month of June. Officials at Vodafone admitted that post the merger it is going to be a challenge to retain the existing high ARPU postpaid users of the telco who make up as much as 25% of the total revenue.

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A note at Jefferies Brokerage read “Vodafone India losing over 500K postpaid customers in the fourth quarter (effectively a 4% decline) is a key negative in our view, and with Jio targeting this same (customer) group by launching a postpaid offer at a 50% discount to incumbents, there could be an acceleration in the same.”

Speaking on the FY18 Jefferies said, “Vodafone India has lost 5% of its postpaid subscribers, which is important as postpaid ARPUs are five-time of prepaid ARPUs”.?? It was a concerning as well as disappointing news for the second largest telco in the country, as the statistics revealed that the postpaid user base which was once 15.68 million just a year ago, has now come down to 14.93 million. In December, this figure stood at 15.5 million. Credit Suisse also made some statements in this regard “Jio’s Rs 199/month price-point is aggressive compared to Vodafone India’s Rs 433 postpaid ARPU.”