- Vodafone-Idea users are increasingly looking to port their numbers to other telecom providers.
- Changing telecom providers is unlikely to make things better as Reliance Jio and Airtel come with their own set of issues.
- Vodafone-Idea's subscribers have been falling since last year recording a loss of 36.4 million users in November.
If Vodafone goes belly-up, its 336 million subscribers will be up for grabs. It's a big chunk of the market that will now have to decide between Bharti Airtel and Reliance Jio. And, that is good news for Airtel and Reliance Jio as India's telecom sector will effectively become a duopoly that will lead to increase in tariffs, hurting the consumers.
A quick review of the Vodafone's Twitter account shows that more users than usual are submitting requests to port their numbers to other telecom operators. Although users don't necessarily specify their reasons for leaving on the public forum, Vodafone asks them to send a direct message explaining why they want to leave before approving portability.
Subscribers and looming debt of the telecom sector
Vodafone Idea's subscriber base has continuously been falling since March 2019. In November, its gross subscriber base lost 36.4 million users — more than half of whom were from rural regions. Industry analysts at Emkay feel this may largely be due to the last leg of Vodafone's subscriber base clean up.
Bharti Airtel, on the other hand, added 1.7 million users to its gross user base and 3.7 million net subscribers. Reliance Jio has a total of 370 million subscribers at the end of December 2019.
The company has to pay up half a trillion rupees to the government in unexpected dues related to licencing fees and spectrum usage charges, going back 20 years, after the recent Supreme Court verdict. This, at a time, when the company already has a back-breaking debt of ₹98,000 crore.
As it scrambles for funds — with bankers turning wary — Vodafone has been bleeding subscribers, fielding call-drop complaints, and posting net losses over the last three years.
Regardless of whether Read wants to leave India or not, Vodafone may not have a choice if it simply doesn't have the money. "It has cash merely to continue operations for the next two-three quarters," said Motilal Oswal in a report.
Shareholders of the three companies, Airtel, Reliance Industries, and Vodafone Idea, have already priced in a possible duopoly in Indian telecom since the Supreme Court of India declined a review petition.
Jio is happy letting the low-spenders go— but where will they go?
Marginal users who were using Jio only for dirt-cheap voice are leaving the network, according to CFO Alok Agarwal.
Airtel, with its own debt of about ₹35,586 crore, will also be happy to adopt the same strategy. That will leave India's millions of first-time phone users who were brought on board by the tariff war, with two options — spend more of their limited income on keeping the phone or opt-out of it altogether if it is unaffordable.
Last year, Vodafone's CEO Nick Read said that the company could exit the market if the government doesn't offer any relief. Even though he later apologised and clarified that Vodafone has no plans to leave India — many analysts still feel that the company is teetering on the edge of survival.
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Disadvantage Jio — Airtel and Vodafone Idea will continue to charge for calls on their network
Jio will charge you for calls to other networks but Airtel and Vodafone won't— Here's why