After a turbulent few years, Vodafone Idea (Vi) is now showing signs of gradual recovery, but the critical question remains: Could 2025 mark a significant turnaround for the country’s third-largest telecom operator? While there are positive developments, analysts caution that the road ahead continues to be challenging and requires sustained effort.
Since his return to the board in 2023, Kumar Mangalam Birla has underscored his confidence in Vi’s revival. At this year’s India Mobile Congress, he reiterated this optimism after the telco successfully raised Rs 18,000 crore through a follow-on public offer (FPO). This capital infusion helped alleviate immediate liquidity concerns, allowing Vi to focus on enhancing its 4G network and laying the groundwork for a delayed 5G rollout – nearly two years behind competitors Bharti Airtel and Reliance Jio. Furthermore, industry-wide tariff hikes implemented in July provided some relief to Vi’s revenue, even as subscriber churn remained elevated. Speculation about a potential government waiver of bank guarantees for spectrum auctions held before 2022 has also buoyed sentiment.
Despite these positive developments, reversing years of setbacks will not be easy. Following the FPO, Vi ramped up its 4G network upgrade, an area that continues to be a priority for the telco as it prepares to roll out 5G services. “We are gearing up to launch our 5G services and are committed to enhancing 4G capacity and coverage to provide the best customer experience,” a Vi spokesperson said. However, analysts note that customer retention remains a critical metric to watch. Despite increased capex in recent quarters, Vi continues to lose subscribers, with the September 2024 quarter seeing a loss of 800,000 4G users – a blow attributed to delays in its network upgrade.
“Vi’s 4G network upgradation, while necessary, has come too late,” an analyst at a leading Mumbai-based brokerage observed. “The telco faces stiff competition from Airtel and Jio, who not only launched 5G services two years earlier but have also stabilised their networks. Since no operator is currently charging for 5G, Vi has no immediate value proposition to lure customers back.” This challenge is compounded by the decline in overall usage metrics in October. During the month, Jio saw moderation in subscriber churn, while Airtel added subscribers for the first time since July. Vi however saw churn increase to 2 million from the average 1.6 million per month in the July-September period.
Vi, however, remains confident in its strategy to improve customer experience as a lever to stem churn. “While it is difficult to predict when subscriber losses will stabilise, we believe the current trend is not indicative of the long term. By expanding coverage, augmenting capacity, and investing in customised solutions and enhanced services, we are confident of retaining customers,” a spokesperson said. To this end, the company has introduced initiatives like streaming and gaming services, bundled offers, and advanced spam detection tools to differentiate itself from competitors. Its converged Vi One offering, combining mobile and home broadband services, also aims to drive stickiness in its subscriber base.
Vi has already added 46,000 new sites and enhanced capacity at over 58,000 locations nationwide to boost connectivity. It also plans to roll out 5G in key cities within its 17 priority circles, where it claims to hold a competitive spectrum portfolio. These efforts are bolstered by the government’s interest in maintaining a three-private-player telecom market in India, a factor that analysts believe works in Vi’s favour.
While 2025 may not immediately reverse the subscriber loss trends that have plagued Vodafone Idea, the telco appears to be in a better position to compete. With sustained efforts to enhance its network, focus on customer experience, and leverage new digital services, Vi may well be poised for a potential turnaround. However, the journey will be long and testing, requiring both strategic execution and resilience.