Vodafone Idea on Monday came up with a new brand logo and a brand image. It’s a united front they are put up, all this while they were talking about network integration, but on Monday, they spoke about how these two brands, Idea Cellular and Vodafone India has come together to form Vodafone Idea and now will be showing a new brand called VI. It’s looking to target customers and win them back from rival parties like Airtel or Reliance Jio. This is especially important for the telecom company since over the last two years it has been steadily losing customers. For instance, at the time of 2018, Vodafone had 400 million subscribers but from the latest reports, it currently holds only 280 million subscribers. However, if we compared their competitor Airtel or Jio, they have seen a massive surge in subscribers especially those using 4g. The united front of the band comes at the crucial time for the telecom company, where it announced last week that they are planning to raise a 25k crore fundraising as a mix of debt and equity.
Why is it important for Vodafone Idea to have a new brand image?
According to the brand experts, all this while, Idea Cellular was very crucial and focused on the rural customers whereas Vodafone played to the urban customer. However, now, with network integration almost complete. The telecom company wants to focus on its brand. Is it going to be an easy one? Not many think so. The customers are so used to hearing the word Idea cellular or Vodafone and going to shops to recharge according to their tariff plans, it might take them some time to come up and understand a new brand logo and new brand image. So, recognition of seeing a new brand might take them some time. Coming off to the topic of tariffs, today in a select media briefing, the CEO and MD of Vodafone Idea, said that there is also a possibility of a tariff hike. He said that although a regulator should be looking at for pricing and industry should be also looking for tariff hikes. So far as RPU (Average Revenue Per User) is concerned, Vodafone Idea is far lower than rival Airtel or Jio. One has to understand that this is a multi prompt strategy that Vodafone Idea has launched one. So there is a tariff hike, a new brand image, and a fundraising plan.
The telecom company is looking at improving its credit rating. Why? So that global investors learn or understand that this brand and this company is here for the long run, and people are backing it and they are ready to invest in it. When it comes to the concept of backing Vodafone Idea, it is yet to be confirmed whether the promoters are going ahead will put in any fresh equity in the company or not. So far the Vodafone, who is one of the parents to Vodafone Idea, has maintained its stance that it will not invest or infuse fresh equity in Vodafone Idea. Whether the Adithya Birla group will now go ahead and invest is yet to be known. The company during the media briefing on Monday morning did mention that they had the confidence of both the promoters and going ahead it is not going to be difficult or been in a position where they will lose their interest or the credibility with their promoters.
However, it now weighs on customers on whether they agree or accept the new Vodafone Idea and continue to recharge their tariff plans keeping in mind that this is the same telecom company that had serviced them for years. It’s also important to note that all this fundraising plan is because the company has to service AGR due to about 50k crore over the next ten years. During the morning briefing, it was also mentioned that though the company and government asked for 20-year period from the supreme court, the supreme court a few weeks ago comes up with a verdict that telecom companies need to submit their AGR dues over the next ten years.
Now, for Vodafone Idea, which has to pay the heaviest number of dues among all the other telecom companies with 50k crore to pay for which installment will start from March 2022. The reason why it is not starting from March 2021 because it has already paid more than 10% of its official AGR dues to the government. Therefore, the rest of the amount will be laid on installments starting from March 2022. This is one of the primary reason why the company is really gearing ahead and trying it’s best to collect funds from wherever it can across investors and coming up with a multi prompt strategy of both debt and equity, so that going ahead it can invest both in it’s a network and also service the AGR dues. It’s also to understand the discomfort times when the company needs to desperately increase in its spectrum and network expansion so that it manages to hold on to the customers and attract new one when rivals like Jio and Airtel who do not has as much as AGR dues have already got a head start.