The price war between telecom companies in India is heading towards duopoly as Vodafone Idea is slowly heading for collapse. But it’s not just the management and employees of Vodafone Idea that are having sleepless nights, there are millions of customers as well that will find themselves in a tough situation.
According to analysts and industry executives, nearly 150 million subscribers of Vodafone Idea (VI) would be most affected by the financial collapse of the struggling telco. These are the subscribers that are still hooked with feature phones and 2G connectivity of VI.
Porting seems to be an easy option for anyone in such a situation, but not for these users – mainly daily wagers – who would need to pay more while switching to rival telecom operators, in terms of higher bills or to buy new 4G phones since Reliance Jio Infocomm does not have a 2G network.
Vodafone Idea Collapse Impact: Big Picture
- In the Supreme Court review petition, Vi stated that it will lose more than 270 million subscribers if it goes bankrupt. Vi currently has only 119 million wireless broadband subscribers or 3G/4G subscribers. The rest are 2G subscribers.
- The debt-ridden Vodafone Idea has been loosing ground in India at unprecedented rate. In May, the company lost record 42.2 lakh subscribers to other providers, mainly Airtel and Jio.
- Airtel has started gearing up for the price increase suspecting the collapse of Vodafone Idea which will eventually result in duopoly in telecom market in India. Airtel has already scrapped its entry-level prepaid plans starting from Rs 49.
- On the other hand, if the troubled VI 2G subscribers consider porting to Jio they will have to purchase a new phone as Jio doesn’t support any 2G device. Experts said that this is impossible for most subscribers. They also stated that Vi’s 2G customers would suffer in either case.
- Eyeing on the huge 2G subscriber base of Vodafone Idea, Jio is set to launch its affordable smartphone, developed in partnership with Google, on September 10. Though the JioPhone Next is Industry is expected to be heavily subsidise in terms of price, it will still be out of range for most of 2G subscribers.
- There is every possibility at 50 – 75 million 2G subscribers of VI decide to go offline due the rising price and additional in boarding cost involved to port on Jio or Airtel.
- Although there are concerns about the network capacity requirements of Jio and Bharti Airtel in order to accomodate the 2G subscribers of Vodafone – if the VI decides to seize its operations in India – companies are confident that they will be able to accomodate them easily.
- As debate on Vodafone falling short of Rs 150 crore on license fee payment is making waves, its existence in future has become more debatable.
Food For thought
Vodafone Idea is more like a deserted baby now. Vodafone Group CEO stated that in no circumstance the company is in situation to infuse more funds in Vodafone Idea. on the other hand, Aditya Birla Group chairman Kumar Mangalam Birla quit the board of the telco last week to making Vi’s survival more concerning now. He made the move less than two months ago after writing to the government offering Vi’s share to any domestic or public sector financial institution that is interested in keeping the company afloat. He made his point that the telco would certainly collapse in the absence of any immediate government support.
Whatever be the future of Vodafone Idea, nearly 150 million Vodafone Idea users are going to have some tough time if VI collapses. As lockdown has already hit them hard in the recent past, we would be surprised if a sizeable chunk of pie decides to go offline, instead of porting their number to other telecom provider, until their financial situation improves. This could lead to a big fall in the number of telecom subscribers in India, as neither Jio nor Airtel wants to serve these low-paying subscribers anymore.