New Delhi: India’s largest telecom operator Vodafone Idea Ltd is ahead of time in unifying its assets across its two telecom brands Vodafone and Idea and aims to complete the entire network integration by June 2020, a senior company official said. Vodafone Idea has the largest subscriber base of 387 million users and the largest spectrum holding worth 1850 MHz in the country.
“Almost 38% of our spectrum assets have been consolidated for both brands. Network integration is complete in nine out of 22 telecom circles in the country... At the time of the merger announcement (in August) we had expected the entire network integration to complete in three years but we have revised that estimate and we will compete this by June 2020," chief technology officer Vishant Vora said.
The hyper-competition triggered by the entry of Reliance Jio Infocomm Ltd in September 2016, hammering tariffs and hitting revenue streams, prompted Vodafone India and Idea Cellular to announce a merger in March 2017. The two companies completed their merger in August and are currently undergoing an integration exercise to create synergies which would bring down costs of operating networks.
“We looked at several examples where telco mergers have happened. We couldn’t find any comparable integration of this magnitude as well as overlap. These two networks were of almost similar scale and size of same business line... There was large duplication...so the designs were reviewed by multi-functional experts. We must have gone through 10-12 revisions...lot of this work was done in-house," Vora said.
The company earlier this month said that it has enhanced the capabilities of few 900 MHz sites through dynamic spectrum refarming and refarmed 2100MHz spectrum from 3G to 4G usage on selected sites.
During the December quarter, Vodafone Idea also exited 5,400 low-utilization sites and optimized the loading equipment on over 21,000 co-located sites as part of the integration process.
However, the company continues to incur huge losses as pricing pressure from Reliance Jio continues unabated. Vodafone Idea posted a loss of ₹5,004 crore in the December quarter. Its earnings before interest, taxes, depreciation and amortization (Ebitda) from wireless operations in India at ₹1,136.8 crore is the lowest among all operators. Reliance Jio, in comparison, posted Ebitda of ₹4,053 crore while Bharti Airtel Ltd reported ₹1,949.8 crore.
Average revenue per user (Arpu) for Vodafone Idea is also the lowest among all three operators at ₹89, compared to Bharti Airtel’s ₹104 and Jio’s ₹130 in the December quarter.
Vodafone Idea last month said its board has approved a rights issue of ₹25,000 crore to existing eligible equity shareholders in line with the recommendations of a capital-raising committee it had set up in November.
“The crucial factor for the company at present is to raise money from sale of towers and fibre to bring down debt. Simultaneously, in order to fund capex, it needs to improve Ebitda which is tricky as it depends on Jio’s willingness to raise tariffs. Spectrum payments to DoT will need to be met during the year. Even after the integration exercise is complete by June 2020 which would mean creation of capacity, it would need to upgrade its subscribers to 4G unlimited plans to boost margins," a Mumbai-based analyst said requesting anonymity.
