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  • Vinay Nair

Can Vi Survive through the Competition?

The telecom industry in India was revolutionised by the entrance of Reliance Jio in 2016 and subsequently disrupted the functioning of already established players like Airtel, Vodafone and Idea.

Jio entered the market with lowest cost offerings, forcing other telecom providers to drop their prices to keep up with them. The market became so competitive that it forced two telecom giants – Vodafone and Idea to merge in 2018 to at least stand a chance against Jio and Airtel. The merged entity of Vodafone and Idea has so for managed to survive in the market despite losing some of their market share to the competition.

The idea for the merger was to combine the assets and customers to emerge as a bigger player than other telecom providers put together.

Vi is here...

Just a few days back Vodafone Idea Limited announced that they have rebranded the company as Vi, an amalgamation of the initials of the two companies. Telecom operators are required to pay licence fee and spectrum charges in the form of ‘revenue share’ to the Centre. The revenue amount used to calculate this revenue share is termed as the adjusted gross revenue (AGR). The company was facing serious issues regarding their AGR dues. These issues were eased as the AGR case verdict allowed Vodafone-Idea to pay their dues worth Rs. 54,754 crores in the next ten years, even though Vi expected the repayment tenure to be a little longer, it still gives them some breathing space to figure out ways to pay the dues.

The company believes that the relaxation of the AGR dues and rebranding as Vi will provide them with a fresh start.

The new branding was introduced right after the most recent Annual General Meeting (AGM 2020) of the company. They are now looking to raise a total of around INR 25,000 Crore through debt, equity and sale of certain data and fibre assets. Even though Vi is planning to raise funds it would be difficult for them to borrow any more money, given their already accumulated debt. Vi will now look to enhance their cash flow stream. The Q2 results of the company will prove to be a major landmark for the company in terms of investments and restructuring. To achieve positive cash flow streams Vi will have to increase its rapidly falling User figures. Their Average Revenue Per User (ARPU) dropped to Rs.121 in the first quarter of 2020. ARPU for Vi needs to double to keep up with their competitors in the long run. Vodafone Idea has had serious problems regarding their cash balances, which are not sufficient to pay off their debt.

By the end of May 2020, Vi’s active subscriber base stood at 277 million whereas their competitors Reliance Jio and Airtel had 313 million and 307 million respectively.

Consumer Confidence

Despite the company’s problems Vi stock has rallied more than 30% since March lows. They have now introduced a new caller tune app called Vi caller tunes. The app does not do much to solve the company’s issues but, it is a small step towards innovation from the company.  Vi has become the co- presenting sponsor of the Dream11 IPL 2020 to be held in UAE. The sponsorship announcement came in close after the announcement of the rebranded company. The brand aims to associate itself with one of the biggest and most popular sporting events in the country to enhance brand awareness and engage their new identity with the audience. They have already come up with customer attractive ad campaigns in connection with their upcoming relationship with the event. They have also relied on heavy advertising to improve awareness and reach of their rebranded company.

VI is also looking to raise tariffs to improve their ARPU. Vi is planning to come up with new prepaid plans like student plans, work from home plans, etc. 


Experts believe that the company needs heavy capital expenditure to emerge as the big player it was a few years ago. Estimates for Vi’s capex for the year are around Rs.9400 crore, whereas estimates for Airtel’s’ capex are expected to be around Rs. 25,000 crores. One of the biggest losers if the company was to shut down will be the government as they would have to face issues in recovering the company’s AGR dues. Capital infusion is key to Vi’s survival.

Experts believe a three-player market lies in the best interest of everyone and will give customers the choice to select their providers given most of the current smartphones offer dual sim card facilities. The recent rebranding and increased expenditure indicate that the company is not willing to go down without a fight and will look for capital and untapped innovative products to first survive and then regain some of its lost market share.

If the company fails to attract any investment it would become a mammoth task for Vi to compete against Jio and Airtel and will have to remain as another smaller player in the market.




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