Will Vodafone Idea and BSNL Always be the Struggling Companies: Opinion

Vodafone Idea (Vi) and Bharat Sanchar Nigam Limited (BSNL) are likely going to struggle for the next few years to revive their business. But what happens after these few years have passed? Will there be an absolute revival, or will these companies continue to struggle? Well, no one can predict the absolute future, but one can take a calculated estimate. How can Vodafone Idea and BSNL turn things around? The answer is simple – higher ARPU (average revenue per user), lower subscriber churn rate, and funding from external investors (for Vi) along with adding new subscribers in both the mobile and fixed-line broadband segment.

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For me, it’s easy to sit here and write that if the above-mentioned things go right for Vi and BSNL, their business will make a U-turn to success. But in reality, things are more complex and harder.

Relief Package Only Helped Vodafone Idea Survive; the Company Needs More to Thrive

Let’s just take the example of Vodafone Idea. Before September 2021, many were of the view that Vi would shut down eventually as the company was not making any profits, nor was it adding any new subscribers. There were just losses, and the company had failed to raise capital from outside sources.

At this point, the government stepped in and said, hey, telcos, here’s a relief package for you. The centre solved one of the biggest concerns for Vi, as is for any other struggling business – the liquidity issue. With the relief package, the telcos were given an option to defer the adjusted gross revenue (AGR) dues as well as Spectrum Usage Charges (SUC) for up to four years. As expected, Vi opted for the deferment. In addition, Vi opted to convert its interest dues into equity for the government (which hasn’t happened yet).