Story Behind Vodafone-Idea's Rise And Fall

The cut-throat competition and high spectrum cost have affected the financial situation of Vi (Vodafone-Idea). The operator has lost 3.72 million customers in July this year, which means that it is serving only 301.3 million users along with a 26.34 percent share.

While Reliance Jio, a four-year-old telecom operator, is serving 400.8 million customers in the country. This means that the company is leading the industry in terms of market share. This is the first time in India that any operator has reached that level, whereas Bharti Airtel is offering its services to 319.9 million customers.

This is quite surprising as both Vodafone-Idea and Airtel are serving 2G, 3G, and 4G customers, while Reliance Jio has managed to get a 35.03 percent share through 4G users. In this article, we will tell you what actually went wrong with Vodafone-Idea and why it's losing subscribers in the country.

It all started with a retrospective tax when Vodafone purchased a 67 percent share in Hutchison Essar for $11.1 billion and the Indian tax department had asked the operator to pay Rs. 20,000 crore as penalty. The tax department said that Vodafone is avoiding tax via this deal.

However, Vodafone won the case against the Indian tax department in the international court of justice. Meanwhile, the Finance Ministry is considering this matter and will take this matter forward.

Then, in September 2016, Reliance Jio launched its services with free voice calls. At that time, the telecom operator used to get 90 percent of the revenue from calling. Later on, the operator announced its tariff plans and all packs were quite affordable. Apart from bringing data plans at cheap prices, Reliance Jio launched the Jio Phone and the Jio Phone 2 at very affordable prices, whereas both Airtel and Vodafone had no such option.

However, to give a tough competition to Reliance Jio, Vodafone and Idea announced their merger in 2018. The merged entity became the number one player in the telecom industry, but soon it started losing its subscriber base due to Reliance Jio's strategies regarding tariff plans. Now, it has become the third telecom player in the sector, while Airtel is in the second position.

In 2019, the Supreme Court has announced its AGR verdict in favor of the government. The apex court has asked both Airtel and Vodafone-Idea to pay or to clear all dues related to average gross revenue as soon as possible. In fact, the court has allowed both operators to make payments in 10 years, but they have to clear 10 percent of the amount by the end of this financial year.

Meanwhile, Vodafone-Idea has announced its new brand identity and now the company is known as Vi. This development comes soon after the landmark decision on the AGR and the annual general meeting of the company. In addition, the company has made several changes in its apps and tariff plans. However, we have to wait for Vi to share its Q2 2021 performance, then we will figure out that changing identity is helping the firm or not.