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Updated - 27/December/2019

Vodafone Idea Halts Investment in 4G Network Expansion to Save Cash

As per the latest news, Vodafone-Idea has put the 4G network expansion plans on hold. "While existing orders are being fulfilled by the vendors, Vodafone Idea has put its new 4G expansion plans for greenfield sites on the major technology-driven investments on hold".

Vodafone-Idea is in a distressed state and without the Government's help, the ship may sink. Both ABG and Vodafone PLC have already raised hands and are not committing to invest Rs. 53000 Crore to bail out the company from the harsh AGR judgment.

The 4G Vendors and technology partners for the company - ZTE, Huawei, Nokia, and Erricson are worried about their dues and the uncertainty of future orders from the company. The company has to pay the installment for the AGR dues on 24th January, and this is seen as a measure to save some cash and pay the due amount. Meanwhile Airtel, Vodafone-Idea has also filed a review petition against the Supreme Court order and has also urged the government to look at the relief to ensure the companies can survive.

The flip side of not committing to network expansion is the adverse effect on network quality.

Users may suffer more call drops, slower data speeds, and poor call clarity. Notably, Airtel and JIO are already ahead of Vodafone-Idea in the number of towers they are operating. VIL subscribers are already unsure about the future of the company and may port out if they face network-related issues.

It is a catch-22 situation for the once impregnable telecom giant.

Mr. Kumar Manglam Birla Says "Will Shut Shop in the absence of AGR Relief"

6/December/2019

Mr. Kumar Manglam Birla said in an event in New Delhi that in the absence of stimulus from the government they will have to shut shop.

“It doesn’t make sense to put good money after bad,” he said at an event hosted by the Hindustan Times. “So that would be the end of the story for us. We’d shut shop.”

“I have every reason to believe it won’t happen,” he said, referring to the possibility of liquidation. “But at the same time ...  it is true that we would shut shop if we don’t get relief. There is no company in the world that can pay that kind of fine in three months.”

Kumar Manglam Birla

Let's read the full story of how once a shining star in telecom is on the verge of bankruptcy and liquidation?

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How can the Biggest Telecom Company Shut Down? What is Wrong With the Indian Telecom Sector?

Back in 2017 when Vodafone and Idea merged, it was clear that all is not well in the Indian telecom sector.

The increasing pressure from JIO forced the two biggest telecom businesses to come together and form the largest company.

The revenue and profits took a deep dive with the launch of aggressive plans from JIO in 2016.

Vodafone and Idea Merger Latest Updates
Can the Merger Break?

But somehow the companies were looking to pass the bad phase, hoping JIO will increase tariffs and they will be able to finally make some money from the business.

Vodafone-Idea posted a quarterly loss of over 4000 crores in early 2019 and losses were still mounting. Not to mention the cost of huge borrowing the company has for buying spectrum and 4G rollout.

These costs are not recovered yet and DOT has dealt another blow to the JIO rivals (Vodafone-Idea and Airtel) in the AGR case.

The Supreme Court verdict that came in October 2019, says that Vodafone-Idea needs to pay Rs. 39,000 crore and a similar amount by Bharti Airtel.

This is more money than what Vodafone-Idea can make in the next 5-8 years considering the current state of tariffs and debt.

I never thought I would be writing this post, considering when I joined the sunrise sector in 2008, fellow workers were getting double-digit hikes every year.

Nevertheless, Vodafone global CEO Mr. Nick Reads has said in a statement that the condition of the company is critical and it will be difficult for the company to survive if government of India fails to offer help.

Additionally, if the latest ET report is to be believed then Mr. Birla is also not considering to pump more money into the telecom black hole.

In a recent even by HT on 5th December, Mr. Birla has clearly stated he is not willing to invest and will shut shop in the absence of relief from the Government.

AGR Issue and Government's Decision (20th November 2019)

Indian Government has given some relief on 20th November by offering deferment of payment by 2 years. But there is no relief in terms of waiver of interest or principal payment.

Indian Government has specified that the NPV for the payment will remain the same and they will also charge interest on the deferred payment which is to be paid in 18 equal installments.

The situation for Voda-Idea becomes more complex as both the parent companies (ABG group) and Vodafone PLC need to be on the same page to pump more capital in a loss-making business.

There seems to be a clear divide at the moment and none of the parties are looking committed to investing more funds.

On the other hand, Mr. Sunil Bharti Mittal may be able to borrow and fulfill the current monitory obligations. In either case, the company will have a severe cash crunch and will find it difficult to operate smoothly.

No offense to the Honorable Supreme Court justice but I think the AGR judgment looks harsh considering the state of telecom companies and the logic used to calculate the AGR dues.

No offense to the Honorable Supreme Court justice but I think the AGR judgment looks harsh considering the state of telecom companies and the logic used to calculate the AGR dues. Why would telecom companies need to pay a revenue share from non-core business revenues, is difficult to comprehend?

Telecom Sector Outlook and Major Issues

Back in the days, after the 2G scam, all the licenses were canceled and several companies shut shop in India.

None of the foreign investments have been successful that sends a very strong message to the global investor's community. Look at what happened to the 1000s of crores of investment made by Uninor (Norway), MTS (Sistema), Russia, and Aircel (Maxis) Malaysia.

Everything turned into dirt. Years of hard work and investments vanished due to government policy blunders.

Would anyone think of investing in the telecom sector in the future? No, not really, unless you are sure you can manage the government and the courts as you please.

The only people who have allegedly made money are either the government or those like the ex-telecom minister A. Raja who was acquitted later by the courts.

I am not worried about the loss of money to Mr. Kumar Manglam Birla (owner of Idea Cellular) or the Vodafone UK but about the monopoly in telecom and loss of jobs.

The job loss will not only impact direct employees, their families, distributors, vendors, and off-roll sales force but many indirect jobs.

Already, lakhs of people have lost jobs due to the shutting down of several telecom companies. At a time when the nation is struggling to create any employment for the young people, this can be a big blow for the Mr. Modi government.

There are already surplus telecom professionals looking for jobs in the market, with a major shutdown like this, things will become painful for many employees.

Also, there are hardly any suitable jobs for them considering a general slowdown in Automobile, FMCG, and retail sectors.

BSNL is dying a slow death and as we know the company has already decided to cut 50% of the workforce and is offering VRS to employees.

The only player left in the market is JIO.

Monopolies are bad, and nobody should have an absolute power whether it is Congress, BJP or for the record JIO in this case.

Even after the relief given by the government to defer the Rs. 39,000 crore payment things are not going to be easy for employees.

There may be more cost-cutting measures and loss of Jobs. Also, the company has increased rates by up to 50% from 3rd December along with Airtel and JIO.

Before the AGR judgment things were still looking positive as finally, TRAI refused to reduce IUC to Zero in favor of one operator. But the AGR judgment has shaken the industry. The 20-year-old conflict between the government and the companies can become the final nail in the coffin if nothing is done.

Overall, even after the relief given by the government, it is a difficult situation for Voda-Idea as the company has a huge total liability of nearly 1 lakh crore. It will not be easy for the company to become profitable unless the investors are willing to put in more money and continue for many more years.

Vodafone Idea Latest News and Updates - Job Cuts

25/Jan/2019 - Vodafone's idea had cut manpower from 21,000 to around 14,500 from September to December and now we were informed that the company is planning to cut more jobs in the next 4-8 weeks.

The news has come from reliable sources outside the organization that shared some of the details.

Struggling with profitability and subscriber decline Vodafone-Idea needs to curtail manpower to reduce the fixed costs and make the company profitable.

Vodafone-Idea

The company is planning to remove many job positions and even circles/states may get merged. Essentially to leverage the economy of scales there are several job positions getting merged or even removed.

It is proposed that there is a further cut at all senior levels.

This is going to be difficult for some employees and will come in effect in the coming months.

Thanks to JIO's aggressive pricing, already the sector has seen many companies pulling the shutter down and forced the merger of these two giants.

It is really hard for telecom employees as there are not too many opportunities in the sector for them anymore. For many moving to other sectors and securing jobs is proving frustrating.

Also planned merger of some circles:

  • There may be a merger of some of the circles to improve the economy of scales.

All merged circles will have 1 Circle head and a single Marketing, Finance, CS, Network team. Moreover, All CXO's are told to cut their 1st line & 2nd line by a significant percentage.

Note* - The story is updated after a response from Vodafone-idea.

Response from Vodafone-Idea

In response to the published story, we have received an official response from Vodafone-Idea, which clearly states that there is no credence about possible job cuts by the company in the coming weeks. The company has stated that these are baseless rumors and shouldn't be believed.

Updated - 25/Jan/2019

Vodafone-Idea Plans to Raise 25,000 Crore to Rival Jio

In another development, the company is planning to raise about 25,000 crores to battle JIO. The largest telecom operator in the country (Vodafone-Idea) is planning to sell the 11.5% stake in the Indus Towers.

vodafone-Idea-logo

Indus Towers is a telecom tower company jointly owned by Aditya Birla Telecom and Bharti Infratel Ltd.

Also, Read -Telecom Wars - JIO To Keep Tariffs Low, Users Rejoice and Rivals Bleed


The government (DOT) on Thursday, 30th July 2018 has given a final accord to the Vodafone and Idea merger, and both the companies are now a merged entity. If a picture can tell you a thousand words, the below image tells you more.

The name on the door has changed from Idea Cellular Ltd to Vodafone Idea Limited (An Aditya Birla Group and Vodafone Partnership). The office address now becomes Birla Centurian Compound, owned by the Kumar Mangalam Birla group.

The Vodafone office is also in Worli, Mumbai and some of them may also be coming to the new office to work soon.

Idea-and-Vodafone-Official-Address

The combined entity has more than 35% market share and is the largest telecom company in the country with 435 million users. Both the companies have made a payment of Rs.7,268.78 crore to the government in the last week (under protest).

Mr. Kumar Mangalam Birla will be the non-executive chairman of the joint entity and Mr. Balesh Sharma (Ex - Vodafone India Head) will be the CEO.

Vodafone and Idea Meger Earlier Details and Story So Far

As per recent updates, Mr. Kumar Manglam Birla has called an extraordinary General Meeting on 26th June 2018 where the new company will be renamed Vodafone Idea Limited from Idea Cellular Ltd.

Also, this news was filed by the company today with the regulatory, and the news of the name change of the company is confirmed. The name change may seem like a simple exercise but it is not there are several complexities.

First of all, both the companies may have to re-work the brand identity and create new advertising campaigns, retail posters, banners, billboards, and even a new Logo. Updating every street and corner of the country with the new Brand identity may be a daunting and very expensive task (may run into 100s of Crores).

But it is a necessary exercise that probably the brand team for both the companies will be planning currently and we may see some new creative ads from the joint identity and new banners in the coming days.

Interestingly, will they also merge the social media pages and twitter handles with millions of followers is yet to be seen.

Also, Idea plans to raise a large capital of Rs. 15,000 crore via-non convertible debentures.

The final approval from DOT is still pending but the expectations are that both companies will complete the merger process in the coming months.

Vodafone-Idea-Limited

Previous updates about the Merger.

The Vodafone and Idea Merger was announced back in March 2017, and it is the biggest telecom merger ever in India. To me, it was one the most shocking news in 9 years of my telecom experience.

Vodafone and Ideas are giants, employing over 10,000 people each, and a merger was never on cards before JIO happened.

Author: Kanuj Sharma

Full-Time Blogger & Entrepreneur, Tech Enthusiast. A decade of experience in Telecom (Engineer & MBA) Read My Story,  Connect On Social.

14 Replies to “Vodafone Idea - Latest News and Update (Future Outlook)

  1. We need VI to survive infact there must be more companies in telecom sector , which keep a check on competition
    Leaving just jio and airtel alive will doom us all as they will be convinced that nobody can challanged us

  2. This reply is too mean. India is a country where there are a lot depending on idea as it is cheap, affordable with good connectivity. Idea service is absolutely satisfying to many. It will be injustice to shut down such a service provider who still has good demand and could revive if it gets a helping hand from government. It's very easy to shut down something, but to get build up into this level of service is very difficult. All supports to idea. Giving up will be really painful and unacceptable. Government should help.

  3. It's a great in detail article, in my first I have read top to bottom.

    It's 50/50 about survival, better if BSNL takes the stake now.

  4. Vodafone Idea (Vi) should continue.....their connectivity is good even in places where airtel is weak. Telecom monopoly should not be allowed else we will be stuck between jio and airtel. Vi....please survive by doing the right things.

  5. I have Vodafone Idea sim and it's network connectivity is superb ....I am fully satisfied by Vodafone Idea service....Vodafone Idea should keep on functioning in India....There should not be monopoly in the market of Telecom and so , Vodafone Idea should keep on operating in India....

  6. Yeh Jo Bhi kiya hai Jio ne yeh acha nahin kiya hai, waise jayada tariff bhi nahin bada hai.

  7. But Monopolies are bad and if we have less competition these guys will not have any pressure of delivering a good quality service to the end-user. Also, they will raise tariffs when they want. Not agreeing to have less than 3-4 players in telecom market. Considering India has close to 900 Million people.

  8. Three points

    1. Let's not waste any further capital and VodafoneIdea Limited must be shutdown.
    2. 95% deadwood in both Vodafone and Idea and its junk technology and infrastructure service providers
    3. Telecom market will grow only when there are strong competitors (Airtel and Jio are in that position).

    Let's stop shedding crocodile tears about job losses of incompetent workers. The smart ones will get other jobs anyway.

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