Telecom operators Bharti Airtel Ltd and Reliance Jio Infocomm Ltd have started internal consultations on how the two companies can swiftly upgrade their networks to absorb users from rival Vodafone Idea in case it shuts down.
“Jio and Airtel are internally relooking at network sizing on how they can absorb users in case Vodafone Idea fails. If that happens, subscribers will flock to these two companies," a person aware of the matter said, requesting anonymity. “The resizing can happen even without buying additional spectrum."
Vodafone Idea has 304 million subscribers out of which 104 million are 4G users. Jio has 370 million 4G subscribers. Bharti Airtel has 283 million subscribers out of which 123 million are 4G users.
If Vodafone Idea winds up operations, its 4G users will be up for grabs for both Airtel and Jio, while 2G and 3G users could flock to Airtel and BSNL, since Jio is a 4G-only network.
Analysts said that Bharti Airtel will be the biggest beneficiary if Vodafone Idea fails.
“In case of Vodafone Idea going into National Company Law Tribunal, Bharti will gain substantial market share and will be the beneficiary," Jefferies India Pvt. Ltd said in a 16 February note.
“We consider Bharti Airtel to be one of the biggest beneficiaries of continued weakness at Vodafone Idea or in a scenario in which Vodafone Idea goes into IBC (Insolvency and Bankruptcy Code). This is because it may gain market share both at the high end (corporate users) and low-end (feature phone users)," BofA Securities said in a note dated 17 February.
Jio and Airtel did not respond to Mint’s query till press time.
To be sure, a telecom operator has to give at least 30 days notice to users before shutting down its network and the Telecom Regulatory Authority of India has to be notified 60 days before so that subscribers can be informed about mobile number portability.
On Friday, the Supreme Court pulled up operators for failing to meet the 23 January payment deadline for dues set by it. Vodafone Idea’s dues total about ₹50,000 crore, according to government estimates. It had cash reserves of ₹12,500 crore as of December end.
After the court’s rap, Vodafone Idea’s board on Monday decided to immediately pay ₹2,500 crore to the department of telecommunications (DoT) and pay an additional ₹1,000 crore before the end of the week.
“The board will take further stock of the situation to see how additional payments can be made," Vodafone Idea said in an exchange filing on Monday.
After making these two instalments, Vodafone Idea will be left with a cash balance of ₹9,000 crore.
The company had on Saturday said that its ability to continue as a going concern is now dependent on a positive outcome of its modification plea filed in the apex court. The next hearing in the matter is on 17 March.
