Vodafone Idea to target premium customer base for its 5G services

On the brink of bankruptcy until recently, Vodafone Idea (Vi) has won the 5G spectrum for Rs 18,800 crore in 17 circles. But this will not be enough for the telecommunication (telecom) operator to retain its customer base, observe analysts.

Telecom analysts say the industry is moving into a duopoly with Reliance Jio (Jio) and Bharti Airtel (Airtel) taking the lead, while laggards like Vi and government-owned Bharat Sanchar Nigam compete for customers at the bottom of the pyramid.  

“Vi’s positioning may be further impacted as peers scale up 5G offerings with higher capacities and enhanced coverage,” says an analyst with Kotak Institutional Securities.

With a customer base of 259 million as of June this year, the third-largest telecom operator is waiting for the government to pick up a 33.5 per cent stake in the company in lieu of ending dues offered to it as telecom relief package. The current promoters — Vodafone Plc of UK and Aditya Birla Group — will jointly own 50 per cent stake in the company.

The company says the 5G spectrum in the mid-band (3,300 megahertz, or MHz, band) in its 17 priority circles and 5G spectrum (26 gigahertz band) in 16 circles will enable it to offer superior 5G experience to customers, as well as strengthen its enterprise offerings.

“We will continue to collaborate with enterprise customers and partners in prioritising and developing 5G use-cases for real-world deployments. The additional 4G spectrum acquisition in the three circles of Andhra Pradesh, Karnataka, and Punjab will further improve customer experience — an area where we have been consistently leading the league tables, according to various third-party reports over the past several quarters,”  it said in a statement.

Following the spectrum acquisition, Jio’s spectrum holding is now the highest in India at 26,772 MHz, while Airtel’s spectrum holding now stands at 22,000 MHz. 

“Notwithstanding financial troubles, Vi has acquired a sufficient amount of 5G spectrum. We may see another round of tariff hikes as the festival season approaches,” says an analyst with IIFL.

The rate hikes will provide the requisite financial cushion to the company, but its falling customer base is a big worry, says an analyst with a foreign brokerage.