Vodafone Idea inability to raise funds could lead to 5G duopoly: GlobalData
Vodafone Idea’s CEO Akshaya Moondra previously said that the telco was in advanced talks with telecom equipment vendors for its 5G rollout strategy
Indian carrier Vodafone Idea’s inability to raise the necessary funds to deploy 5G infrastructure could potentially lead to a duopoly between local telcos Bharti Airtel and Reliance Jio Infocomm, local research firm GlobalData reported.
According to the report, Vodafone Idea is currently facing challenges in rolling out 5G services because the telco is experiencing difficulties in securing funding for investing in 5G equipment and infrastructure.
Shri Charan Padala, principal analyst in the thematic intelligence team at GlobalData, 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 adjusted gross revenue related dues to the Indian government, which have now been converted to equity. … The company’s brand perception and customer loyalty have been impacted as customers in India prioritize reliability and efficiency when selecting a telecom operator.”
According to GlobalData, Vodafone Idea could jeopardize the company’s future in the Indian telecom market if it fails to secure funding. The report also noted that end users will be affected due to the lack of enough 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 realize 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,” Padala said.
Padala also said that Vodafone Idea could monetize some of its non-core assets such as towers and data centers to raise additional funding for its 5G deployment. “While Vodafone Idea’s funding struggles pose significant challenges, 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,” Padala wrote.
In February, Vodafone Idea’s CEO Akshaya Moondra said that the telco was in advanced talks with telecom equipment vendors for its 5G rollout strategy.
“We have live 5G clusters in Delhi and Pune where we have partnered with various OEMs to test compatibility of available 5G handsets. Further, we are in advanced stages of discussion with various network vendors for finalization of the rollout strategy,” Moondra had said.
“Our effort will be that as soon as funding is in place, we will expedite our rollout to have a presence in the geographies which matter, particularly in the context of 5G, so that we are able to compete as early as possible,” he added.
Indian operators Reliance Jio Infocomm and Bharti Airtel have already deployed 102,215 5G base stations across the country, according to data from India’s Department of Telecommunications (DoT).
India will achieve 100% coverage for 5G services by the end of December 2024, the country’s communications minister, Ashwini Vaishnaw, recently said.
The official said that telecom operators Bharti Airtel and Reliance Jio Infocomm aim to complete their 5G network deployments within the next 15 months.