Vodafone Idea may fall behind rivals in its 5G deployment due to funding challenges, leading to a duopoly between Bharti Airtel and Reliance Jio, according to Global Data.
The data company said Vodafone Idea is “experiencing difficulties in securing funding” to invest in 5G equipment and infrastructure, leading to a “sharp drop in its share price”. Vodafone Idea is currently trading at INR6.20 per share, which is a year-on-year decline from INR11.20.
GlobalData principal analyst Shri Charan Padala said: “Vi is struggling to attract external investors, and the company has cited delays in converting dues to equity as one of the reasons. The company owed over $7 billion in adjusted gross revenue-related dues to the Indian government, which have now been converted to equity.
“Despite this, Vi is yet to secure fresh investments, which has put it at a disadvantage compared to its competitors. The company's brand perception and customer loyalty have been impacted as customers in India prioritise reliability and efficiency when selecting a telecom operator.”
Padala adds if the operator fails to gain funding could jeopardise its future in the Indian market and negatively impact Indian subscribers from lack of competition.
“The Indian government may need to intervene to ensure that there is healthy competition in the telecom market and that consumers have access to high-quality, affordable services. To realise the broader benefits that the telecom sector provides to other sectors, the survival of Vodafone Idea is necessary to avoid a duopoly in the Indian 5G market,” said Padala.
The analyst points monetisation of non-core assets such as towers and data centres as a route to raise funds for the operator, a trend that is being seen globally.
“There are opportunities for the company to secure proper funding, expand operations and then capture a greater share of the market. The Indian telecom market’s direction will be defined by the cumulative impact of several factors such as government policy, consumer demand, and the pace of innovation and competitiveness among the different telecom operators,” concluded Padala.
Developing Telecoms reached out to Vodafone Idea for comment.
Vodafone Idea sold a 32% stake to the government to alleviate its constant financial woes in the Indian market, as the state remains insistent on the operator meeting its 5G deployment obligations.