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Vodafone Idea looks to bundle broadband with top 4G plans


Vodafone Idea: Telco’s big challenge would be to raise $2-2.5 billion it needs to invest in it, say analysts.

Vodafone Idea is looking to selectively bundle fast home broadband services with its top-end 4G postpaid and prepaid mobility plans in priority markets, adapting global learnings from its UK-based coparent, as part of moves to scale up its unit, YOU Broadband, and take on Reliance Jio Infocomm and Bharti Airtel, people familiar with the matter said.

Analysts though said financially stressed Vodafone Idea’s major challenge would be to cough up the $2-2.5 billion (Rs 14,200-Rs 17,500 crore) it needs to invest to make a serious play in the wired home broadband market and compete with its aggressive rivals.

Vodafone Idea

“Voda Idea plans to use a mix of global learnings, and subsidiary YOU Broadband’s network infrastructure resources, to bundle home broadband services to its high-spending 4G mobile users in its top 10-to-12 markets,” – Report.

Voda Idea, which has been losing subscribers by the millions every quarter, is coowned by the Aditya Birla Group, headed by Kumar Mangalam Birla, and UK’s Vodafone Group.

The Vodafone Group recently became Europe’s leading converged services operator following the British telco’s 18.4-billion buyout of Liberty Global’s cable network assets in July. It offers converged communication services in important markets such as Germany, Italy, the UK, Spain, Czech Republic, Hungary and Romania. A convergent telco, unlike a pure mobility player, bundles a mix of mobile, fixed broadband and media services, including digital TV.

Erstwhile Vodafone India bought YOU Broadband three years ago from TRG Capital for some Rs 400 crore. Loss-making YOU Broadband, which offers wired broadband and landline calling services, then became a Voda Idea unit in August 2018 following the Vodafone India-Idea Cellular merger.

Its network infrastructure comprises 3,000 km of optic fibre cables and 17,000 km of last-mile coaxial cables across 18 cities. YOU Broadband serves roughly a million subscribers currently, in an under-penetrated market with 18.42 million wired broadband users at end-June, with Bharat Sanchar Nigam with 9.05 million customers as the top player, followed by Bharti Airtel (2.40 million), trailed by Atria Convergence Technologies, HathwayNSE 4.86 % Cable & Datacom and MTNL with 1.45 million, 0.84 million and 0.74 million users, respectively, as per the regulator’s data.

Vodafone Idea’s move to augment its home broadband services comes after Jio last week launched ultra-fast home broadband services, and Airtel also came up with a converged digital entertainment services platform, Xstream, and further matching Jiofiber’s 1Gbps peak fibre broadband speeds. On Wednesday, Airtel launched Xtream Fibre with 1 Gbps data speeds at Rs 3,999 a month — similar to Jio’s pricing — offering unlimited landline calls to any network in India, besides a host of content services.

Both telcos are trying to lure premium customers by offering triple-play services of content and call, backed by highspeed wired broadband. You Broadband though faces an uphill task to compete, given it is still a relatively smaller player in the space which is capex intensive and takes time to expand. You also doesn’t offer DTH services, said analysts.

Besides, it would need significant capital infusion for scaling up, which could be a challenge, given the balance sheet pressures Vodafone Idea faces in its loss-making core mobility business.

“It’s bound to be a tough call as Voda Idea would need to pump in around $2-2.5 billion capex into YOU Broadband to target 5 million homes, as wiring a million households would, typically, entail investments of $400-500 million,” said Rajiv Sharma, co-head of research at SBICap Securities.

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