After Jio and Airtel, only Vodafone Idea (Vi) is left in the telecom sector to enter the 5G race. But now the sword of captivity has started hanging on Vodafone Idea, which is suffering continuous losses in India. As per the latest report by Kotak Institutional Equities, difficulties are increasing in front of Vi. Also, at the same time, amidst increasing competition, the telecom company's customers are decreasing rapidly. Because of the growing crisis, it has been reported that there is a possibility that the telecom service provider may shut down its operations soon.
Customers of Vi are spilling
Without the tariff rate hike, Vodafone Idea is unable to make the necessary investments and launch 5G services in India. As the company is heavily indebted, it has failed to pay the spectrum charges to the government.
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The telecom company also owes a huge debt to the tower network provider, which threatened to terminate the service to the company. As per the rules, telecom companies have to give at least 30 days advance notice to customers before discontinuing their operations in India. Telecom regulator TRAI has to give notice in this regard 60 days in advance.
Increasing loss due to not being able to increase the price
According to the latest report, Vodafone Idea is being adversely affected by the delay in the hike in tariff rates. It is becoming difficult for the company to survive in the Indian market.
The exit of Vodafone would create a monopoly situation between the two companies- Jio and Airtel. It states that Vodafone Idea needs to increase investment to expand its existing 4G coverage and enter the 5G services in the nation. The brokerage company has also suspended the rating of Vodafone Idea. He has made it clear that raising funds is a difficult task for the company given the debt of more than Rs 2.3 lakh crore and the possibility of loss in market share.
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Why is Vodafone Idea in loss?
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It has been stated in the report that if the company does not invest, then its market share will keep decreasing. The report stated, "Vodafone Idea may face a cash shortfall of Rs 5,500 crore over the next 12 months and may even have to shut down operations due to no rate hike or delay in raising capital."
If Vi users wish to continue with the telecom services on their number, we suggest going to some other service provider- port the number to either Jio or Airtel.
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What will happen to the Vodafone Idea customers?
According to the data of December 31, 2022, Vodafone Idea has about 23 crore Indian customers and it is the third-largest telecom company in India, and 11th-largest in the world as per the customer base. But the question is- what will happen to the customers if the company shuts down? Porting the number or changing the service provider is the option. Also, if the company ceases to operate, sufficient time will be given to the users of Vodafone Idea to get the network concerns sorted.
Telecom companies will increase prices from next year
In a report, the domestic brokerage Kotak Institutional Equities stated that telecom companies will start increasing the tariff after next year's general elections. Telecom companies are currently under a lot of pressure due to rising inflation and the cost of rolling out 5G.