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The Silicon Review Asia

No Amount of Bailout Can Help Vodafone Idea Compete with Peers

No Amount of Bailout Can Help Vodafone Idea Compete with Peers

According to analysts, any steps taken by the government to help out Vodafone Idea financially won’t be enough to save the struggling telecom company against Reliance Jio Infocomm and Bharti Airtel. “The government will find it too expensive to provide a large enough fix needed to prop up VIL for anything other than the medium-term,” Deutsche Bank said in a note.

The German Bank said, “The Aditya Birla Group (one of VIL’s co-promoters) may even consider getting Vodafone Idea to go into bankruptcy on the chance that it may be able to repurchase the rump of the business.”

Vodafone Idea faces AGR-related statutory dues over Rs 53,000 crore and its Chairman Kumar Mangalam Birla has remarked that the company will shut down without government help. Deutsche Bank predicts that Vodafone Idea needs to hike prices, receive governmental relief and firm market share holdings to service. “But we believe it will get two out of these three (requirements) at best, which won’t be enough.”

Under the current market circumstances, telecom market leader Jio can be seen pushing for market share gains and aggressive customer additions in the market that is changing into a private duopoly in the coming 9-12 months.  Jio’s operating income is estimated to double in two years to Rs 52,400 crore and its mobile user base to increase to 500 million.  “Jio’s Ebitda to double by FY22 to Rs 52,400 crore ($7.4 billion) and pegs the enterprise value of its mobile business at $66 billion,” CLSA said.

Jio has added a whopping 14.8 million customers and their current user base stands at 370 million customers as of December 2019.

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