In Short:
Bharti Enterprises chairman Sunil Mittal stated that having three private telecom companies is best for India. Vodafone Idea (Vi) received financial support to prevent a duopoly in the telecom sector. Vi plans to raise Rs 45,000 crore to improve its fortunes. Analysts predict that Vi’s market share will slow down, benefiting competitors. Tariff hikes are expected in the future, benefiting all telcos.
Bharti Enterprises Chairman Advocates Three Private Telecom Companies in India
In a recent statement, Bharti Enterprises chairman Sunil Mittal expressed his belief that a market with three private telecom companies is ideal for India. This remark comes as debt-laden Vodafone Idea (Vi) secures a much-needed financial lifeline, alleviating concerns of a telecom sector duopoly.
Vi’s Funding Plan and Market Impact
Vi aims to raise approximately Rs 45,000 crore through a combination of equity and debt. With analysts noting that this influx of capital will bolster Vi’s position in the market, fears of a duopoly seem to be less imminent, at least for the foreseeable future.
Analysts predict that Vi’s ability to attract and retain subscribers will improve post-funding, potentially slowing down market-share gains for competitors like Reliance Jio and Bharti Airtel. Despite this, Jio and Airtel are expected to continue gaining market shares due to their ongoing investments in 5G technology.
Vi’s Path Ahead
Vi has been facing challenges in retaining subscribers since its merger in 2018. With limited liquidity impacting its network expansion and service offerings, Vi currently holds an 18.5% revenue share in the market, while its competitors, Jio and Bharti Airtel, stand at 45% and 33% respectively.
According to assessments by industry experts, Vi’s strategic investments post-fundraising will likely lead to improved network coverage, potentially mitigating subscriber losses and contributing to its market-share stability.
Future Industry Dynamics and Tariff Hikes
Analysts predict that Airtel and Jio will continue to strengthen their market positions through 5G investments, while Vi’s market presence may experience a positive shift post-investment.
Additionally, anticipated tariff hikes post-general elections could benefit all telecom companies in the market. Analysts foresee significant tariff increases in the coming years, with adjustments set to impact revenue market shares for Jio and Airtel, considering Vi’s competitive positioning.
