“We’re realising that these customers recharged with Rs 35 or similar vouchers once, second and third time, and then started looking for better value somewhere else. For such needs, we have come up with a voucher of Rs 45. The initial indications were encouraging, so last week this product was taken to all of India. We are confident of improving churn as well as ARPU,” Vodafone Idea
Chief Executive Balesh Sharma said in an earnings’ call on Monday.
The management also witnessed some down trading of high ARPU customers, primarily as they moved from unlimited voice and data plans, priced at Rs 169 plus, to the unlimited voice and fixed data plans, priced at Rs 119 or Rs 129. This is because the primary need for these customers was voice.
Clearly, there is a lack of traction from data users, pushing them to voice heavy plans, which the company hopes to control through better promotion. Sharma also said the company faced some teething problems after consolidating their distributor base across markets, which also had an impact on sales. “We are now running hyper-local promotional campaigns targeting specific cities and districts,” he said.
“We estimate a funding gap of Rs 18, 000 crore in FY21 (including debt repayments) for Vodafone Idea, which can potentially be met through fibre sale and equity raise. Net debt will keep rising until Ebitda crosses Rs 25,000 crore, which will likely happen in FY24,” wrote Sanjay Chawla, research analyst, JM Financial. Vodafone Idea’s performance has prompted analysts to reassess their estimation of Bharti Airtel’s Q1, since stable Q4 numbers had indicated the sector was on its way to recovery.