Vodafone Idea (Vi) is preparing for a major 5G rollout as it seeks to compete with market leaders Reliance Jio and Bharti Airtel in India’s highly competitive telecom sector. Despite trailing its rivals, Vi is betting big on affordability and strategic investments to make a comeback and stay relevant in the 5G era.
Vi’s 5G Launch Plans
Vi plans to debut its 5G mobile broadband service this March, targeting 75 key cities, including metro areas and industrial hubs with high data consumption. Unlike Jio and Airtel, Vi aims to differentiate itself by offering affordable pricing, slashing entry-level 5G plan costs by up to 15%.
Currently, Airtel’s base plan starts at ₹199, and Jio’s at ₹189. Vi’s aggressive pricing strategy could ignite another price war, especially as Jio and Airtel focus on increasing their average revenue per user (ARPU).
The Competitive Landscape
Vi faces stiff competition from Jio and Airtel, who dominate the 5G segment with 14.8 crore and 10.5 crore 5G customers, respectively, as of September 2024. In comparison, Vi’s active user base stands at 17.88 crore, far behind Jio’s 44.84 crore and Airtel’s 38.34 crore.
While Jio and Airtel have established significant lead in 5G, Vi is entering the race as a latecomer. To catch up, the company is also focusing on expanding 4G coverage, upgrading existing sites, and leveraging financial relief from the government.
Strengthening 4G and Network Expansion
Vi is not abandoning its 4G network as it prepares for 5G. The company aims to expand its 4G coverage to 90% of India’s population by June 2025, up from the current 77%.
To achieve this, Vi recently secured a ₹30,000 crore deal with global suppliers like Nokia, Ericsson, and Samsung. These investments will help Vi upgrade its 75,000 existing 4G sites into 5G-capable sites over the next three years.
Dealer Commissions and Financial Moves
Vi is also boosting its dealer commissions to attract and retain customers. According to Jefferies, Vi spends the highest proportion of its sales on dealer commissions, allocating ₹3,583 crore (8.4% of FY24 sales). In comparison, Airtel spends 4%, and Jio spends just 3%.
The company’s strategy received a significant boost with the government waiving a ₹24,800 crore bank guarantee, allowing Vi to secure new loans and additional credit. Vi is now looking to raise ₹25,000 crore through loans and another ₹10,000 crore via letters of credit to fuel its expansion plans.
The Road Ahead
Vi’s 5G rollout represents a crucial opportunity for the telecom giant to regain market share and improve its financial standing. With a focus on affordable pricing, expanded coverage, and improved distributor incentives, Vi is preparing to challenge Jio and Airtel’s dominance.
However, the path ahead won’t be easy. Vi’s late entry into 5G, combined with fierce competition and existing financial constraints, will test the company’s resilience. Whether Vi can close the gap and secure a stronger position in India’s telecom market remains to be seen.
