Vodafone Idea loses customers but should still find investors

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Indian operator group Vodafone Idea is struggling for customers and for the cash it needs to keep its business afloat.

We already knew that, to an extent, but happenings in the Indian mobile market over the past few days have brought the one-time big player’s situation into sharp relief. While the telco is indeed in some trouble, warnings over its possible demise might be a little premature.

The monthly publication of Indian mobile market statistics usually makes more comfortable reading for Reliance Jio and Bharti Airtel than it does for Vodafone Idea, or Vi, as it now styles itself. We have grown used to that in the first part of this year. But the latest figures shared by the Telecom Regulatory Authority of India (TRAI) this week show that Vi lost 1.8 million customers in April, pushing its market share down below the 24% mark.

By contrast, Reliance Jio picked up 4.8 million net new customers and Bharti Airtel just over half a million, taking their own market shares to 36% and 30% respectively.

It’s tempting to wonder what the big deal is for Vi. After all, those monthly customer losses were the first it recorded in 2021 – March brought a gain of just over 1 million, for example – and the telco has a total mobile customer base of close to 282 million, just about 90% of which are active users. Surely with numbers like that there’s a viable business here, even with some customers jumping ship.

It’s not quite that simple. Vi needs money, and lots of it.

Aside from the fact that prices, and therefore ARPUs, remain low in India, which is something all operators there have to contend with, Vi has a whole heap of financial issues. It needs money for debt repayments, spectrum dues, and the like, and its balance sheet is not looking the healthiest; its net loss in the fourth quarter of its most recent financial year came in at 69.85 billion rupees (US$938 million), while its top line took an 18% dive year-on-year.

Earlier this week the Economic Times reported that Vi has entered talks with US private equity firm Apollo Global Management aimed at securing as much as US$3 billion in funding over the coming three months to enable it to meet payment obligations.

The telco might even be open to selling a sizeable stake to the investment group, the paper’s sources said.

There has been no comment from Vi, its parent companies, or indeed any of the parties reportedly involved.

Apollo Global is one of a number of global investors said to be interested in buying into Vi’s fibre and data centre assets. The Hindustan Times reported that it, TPG Capital, Carlyle Group and others are in early talks with Vi about the assets, which it values at around the $1 billion mark. Offloading infrastructure assets is by now a tried and tested way for telcos to make money, so there’s nothing unusual in that announcement. But with Vodafone’s total liabilities standing at 1.8 trillion rupees ($24 billion), according to the news outlet, any deal might turn out to be a drop in the ocean.

Such a grim financial picture has naturally led to much discussion of the operator’s demise, some of which has come from Vodafone itself; in its recently-published Q4 report its auditors noted that “there exists material uncertainty relating to the group’s ability to continue as a going concern which is dependent on its ability to raise additional funds as required, successful negotiations with lenders on continued support, refinancing of debts, monetisation of certain assets, outcome of the modification application filed with the Hon’ble Supreme Court and clarity of the next instalment amount, acceptance of its deferment request by  DoT and generation of cash flow from operations that it needs to settle/renew its liabilities/guarantees as they fall due.”

Which is a long-winded way of saying that Vodafone has many financial plates spinning and it could be in serious trouble should they come crashing down.

While that is a very real prospect, the likelihood of Vi disappearing entirely seems slim. There has been talk of India becoming a mobile duopoly, but that is not something the government would want to happen, nor would it be a satisfactory outcome in a market of well over a billion people, a fair number of whom still do not have a mobile connection.

It is hard to believe there are not plenty of investors out there on the global stage that would fancy a punt at the Indian telecoms market, particularly a business with 282 million customers.


  1. Avatar Kr 14/07/2021 @ 4:12 am

    If govt stop supporting jio, then all the telecom players will succeed in India market.

  2. Avatar Pavan Kumar Vattem 14/07/2021 @ 9:42 pm

    Yes all support every one equally

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