Vodafone Idea, widely known as Vi, could be staring at a bleak future due to increased competition in India’s telecom sector, according to a domestic brokerage report published on Monday. The report pegs the company’s survival hopes to price hikes being implemented by the telecoms this June. Reuters said that Vi’s debt stands at over Rs 2.3 lakh crore, raising questions about the company’s ability to raise the funds it needs to remain in business.
The report from Kotak Institutional Equities predicts that the telecoms are unlikely to begin raising fares until after the general elections the following year. Inflation staying above the Reserve Bank of India’s upper tolerance level adds another hurdle to the process. Experts worry that this delay could leave Vi unable to invest in or launch 5G services, thus allowing its rivals to corner premium customers and eventually lead to a duopoly.
According to the report, Airtel is currently charging more than Reliance Jio’s monthly Outgo plans, making a unilateral price hike unlikely. On the flip side, this could further reduce the company’s market share, further damaging Vi’s chances of staying afloat in the long run.
Vi’s uncertain future is in the hands of Ashwini Vaishnaw, its Chief Executive Officer, who is confident that the company can hold its own amid tremendous odds. He has recently stated, with a foreboding optimism, that India can come up with something as strong as AI chatbot GPT, in a matter of few weeks.
Ultimately, it is up to Vi and its executives to craft a path to sustainability, in light of a slowly recovering economy, new technologies and stringent industry regulations. The efficacy of their tactics will decide the fate of thousands of investors and employees who have put their trust in Vodafone Idea.
