Vodafone Idea Ltd (Vi) can possibly forgo of 50-70 million subscribers in the next one year, after shedding 155 million customers in the past nine quarters, Fitch Ratings said on Monday. Meanwhile, rival Reliance Jio Infocomm Ltd is predicted to welcome more than half of Vi’s user losses and the remaining could be bagged by Bharti Airtel Ltd, the rating agency added.
The global credit rating agency said Vi’s plan to secure capital of ₹25,000 crore, in a combination of equity and debt, may not suffice its capital requirements and thus nit reinstates the cash-strapped telco’s back to its competitive position and reverse the subscriber losses.
Analysts believe that the proposed amount would enable Vodafone Idea, which owes hundreds of billions of rupees to the government in back fees, sustain operations for a maximum of two years. Vi has till date paid ₹7,854 in adjusted gross revenue (AGR) dues but still owes more than ₹50,000 crore to the department of telecommunications.
Jio and Airtel are likely to step up their combined revenue market share to 80% in the next one year from 74% as of September as Vodafone Idea is rapidly sliding down on the scale of market share, Fitch said. “We expect Bharti Airtel and Reliance Jio to increase their combined revenue market share to 80% in the next 12-18 months as the third-largest telco, Vodafone Idea, is rapidly losing market share given its weak balance sheet and limited financial flexibility,” Fitch said.
1.2 million subscribers decided to terminate Vodafone Idea services in August, which pulled down the telco’s market share to 26.15%, according to Telecom Regulatory Authority of India. Both Reliance Jio and Airtel added customers in August, clocking 35.08% and 28.12% market share, respectively. Vi’s chief executive, Ravinder Takkar, said in October the telco will not shy away from raising prices of voice and data services and will set a precedent in the industry. The management of Airtel has also spoken of a tariff hike but has not clearly mentioned the timeline yet.
