Vodafone Idea appears to be having problems in the face of escalating competition in the telecom industry. The company may have to cease operations as a result of issues related to the growing competition, in addition to the delay in raising the necessary amount and mounting debt. On Monday, a domestic brokerage firm made this statement. Also, it was stated that telecom providers will begin raising tariff prices after the general elections of next year, probably in June 2024, as long as inflation remained above the Reserve Bank of India’s acceptable range.
In the Vodafone Idea issue, Kotak Institutional Equities
stated in research that Vodafone Idea will not be able to start 5G services without a pricing increase. As a result, the company’s customer base will be further reduced, and capital-raising ambitions will become a reality. Will be challenging. The research states that only Reliance Jio and Bharti Airtel will remain in the market as a result of this. As a result, there is uncertainty regarding the two businesses’ potential long-term monopoly situation.
The inflation brokerage firm predicts that only
after the general elections in June 2024 will telecom firms likely raise tariff rates. The cause for this is retail inflation being above the tolerable level of RBI and elections in the states. The report states that “Vodafone Idea will be negatively impacted by the delay in raising the tariff rates and it will be challenging to survive in the market.” As a result, a situation of the monopoly of two enterprises will occur in the market.
Vodafone Idea’s 4G
According to some reports, Vodafone Idea must increase investment in order to expand 4G coverage and launch 5G services. According to the analysis, the company’s market share will continue to decline if it does not make investments. The report states that if there is no rate increase or there is a delay in acquiring money, Vodafone Idea “may suffer a liquidity shortfall of Rs 5,500 crore over the next 12 months and may also have to shut down operations.” The brokerage firm has also put Vodafone Idea’s rating on hold. It has made it clear that the company will have a difficult time raising money given its debt of more than Rs 2.3 lakh crore and the potential for bankruptcy.
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