October 24, 2020

Vodafone-Idea Requires Additional Investment To Match Reliance Jio’s Postpaid Plans

After completing four years of its operations, Reliance Jio has finally announced the launch of new postpaid plans in the country. The company has announced five plans that are priced between Rs. 399 to Rs. 1,499. Besides, the company has introduced several benefits with its newly launched tariff plans.

However, it seems that India’s third-largest telecom player Vi (Vodafone-Idea) is going to face another pressure on its financial situation as per a new report issued by ICICI Securities. In fact, the report pointed out that the operator has to increase its tariffs by 90 percent to compete or to bridge the financial gap. “The current need to protect postpaid subscribers could, therefore, pressurize its cash flows further,” ICICI Securities said.

The report also highlighted that Vodafone-Idea is serving 2.5 crores postpaid users, which means 7.8 percent of its total users, while Airtel has 1.46 crores users on its platform. The report said that there is no doubt that Vodafone-Idea has more postpaid subscribers on its platform, but still, it is vulnerable as it is losing customers every quarter.

Vodafone-Idea Need Additional Investment Of Rs. 2,000 Crore In Postpaid Segment

Furthermore, the report states that there are chances that both Airtel and Vodafone-Idea might lose postpaid customers in the coming days. “We see the offering having the potential to drive at least some churn from incumbents unless they match the OTT offers,” ICICI Securities said. The report added that “Matching of the offering, on the other hand, could result in additional annual costs to Airtel and Vodafone Idea (VIL).”

Apart from this expectation, the firm said that both Vodafone-Idea and Airtel require an additional investment of Rs. 2,000 to Rs. 2,500 crore to compete against Reliance Jio’s newly launched postpaid plans.

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