December 1, 2020

Vi Might Lose More Customers Due to Insufficient Investments In Networks

After losing eight million subscribers in Q2 FY21, Vi (Vodafone-Idea) is likely to lose more customers in the coming quarters due to insufficient investments in networks. Besides, the company has shut down its 1,145 sites in the Q2 FY21.

“While this will help improve its data services, its peers continue to invest more in networks. In 2Q, Bharti Airtel added nearly thrice the number of broadband base stations (30,000) increasing the gap with VIL to 80,000 broadband base stations,” research firm Jefferies said.

Similarly, other analysts at brokerage and research firm Edelweiss Securities expects that insufficient investment in the network might decrease data and calling consumption. They said that Vodafone-Idea should increase tariffs and infuse some money in the networks to increase the subscriber base. Analysts also pointed out that the telecom operator is facing a double challenge regarding upgrading the 4G network and AGR dues.

Furthermore, JP Morgan said that it seems that people are not using Vodafone-Idea SIM as their primary network as the operator is losing customers and this trend is likely to continue. Notably, the operator has reported a loss of Rs. 7,203.4 crore in the Q2 of this financial year. However, the company manages to increase its ARPU to Rs. 119 in Q2 against Rs. 114 in the Q1 FY21.

Vi Might Increase Tariffs Soon

Despite the fact that the operator is losing customers due to its poor services, it is likely to increase the tariffs soon. “If you look at the current pricing, there is something wrong with it. We have said before that we would not shy away from hiking prices and We hope others in the industry will follow,” RavinderTakkar, the CEO of the company said after announcing the Q2 results.

It is quite evident that the latter will raise tariffs soon as it has to increase its ARPU to Rs. 300, if it wants to sustain in the industry and don’t want Reliance Jio to lead the market.

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