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Nomura backs Vodafone Idea’s roaming strategy, still prefers Bharti Airtel
Vodafone Idea has started offering free international roaming with some plans.
Nomura says this is different from common offers such as streaming or software bundles.
The benefit is mainly available to prepaid users who buy annual plans.
This could persuade valuable customers to stay with Vodafone Idea longer.
It may also help Vodafone Idea gain customers from Bharti Airtel and Jio.
The company might earn slightly less from each customer, but gain more customers overall.
Nomura expects Vodafone Idea’s business performance to improve from a lower starting point.
Even so, Nomura still considers Bharti Airtel its preferred telecom stock.
Nomura views Vodafone Idea’s free international roaming offer as a differentiated plan feature aimed at subscriber retention and growth.
The offer applies to prepaid customers on annual plans, potentially encouraging premium users to recharge annually and reducing churn.
Nomura expects Vodafone Idea’s EBITDA to grow at a 15% compound annual rate from a lower base as operations improve.
The brokerage said the strategy may slightly reduce average revenue per user but could increase overall revenue through subscriber growth.
Bharti Airtel remains Nomura’s top telecom pick, although its larger postpaid base could expose it more to international-roaming revenue pressure.
- Who
- Vodafone Idea, Bharti Airtel, Jio, and Nomura are the main companies and analyst involved.
- What
- Vodafone Idea is offering free international roaming on eligible plans, prompting Nomura to assess the impact on telecom competition and revenue.
- Where
- The comparison concerns India’s telecom market, with international examples including the United States, Singapore, and the European Union.
- When
- The article discusses the current offer and refers to Airtel’s plan restructuring announced in mid-August.
- Why
- Vodafone Idea is seeking subscriber growth and retention, while telecom operators are looking for ways to increase revenue from existing users.
Vodafone Idea’s growth strategy
Bharti Airtel’s competitive position
Subscriber growth versus ARPU
Vodafone Idea’s growth strategy
Nomura sees Vodafone Idea’s roaming bundle as a smart way to retain and attract subscribers, even if it sacrifices some average revenue per user.
Bharti Airtel’s competitive position
Airtel and other operators could face pressure to match the offer, potentially causing minor near-term revenue losses as roaming becomes more widely bundled.
Impact on premium customers
Vodafone Idea’s growth strategy
Vodafone Idea may use annual-plan roaming benefits to attract premium users from Bharti Airtel and Jio and reduce churn among its own customers.
Bharti Airtel’s competitive position
Bharti Airtel has a larger postpaid customer share and may be more exposed to international-roaming revenue losses if bundled plans become an industry norm.
Strategic response
Vodafone Idea’s growth strategy
Vodafone Idea has focused on subscriber growth rather than responding to Airtel’s mid-August plan restructuring or prioritizing ARPU expansion.
Bharti Airtel’s competitive position
Nomura expects Bharti Airtel may initially observe customer response before potentially introducing a similar bundled plan.
Key facts
- Brokerage view
- Nomura expects Vodafone Idea to post a 15% EBITDA compound annual growth rate from a lower base.
- Offer eligibility
- Free international roaming applies to prepaid customers on annual plans.
- Strategic aim
- The offer is intended to support subscriber retention and growth, potentially at the cost of some ARPU.
- Competitive target
- Nomura said Vodafone Idea may attract premium customers from Bharti Airtel and Jio.
- Postpaid share
- Bharti Airtel’s postpaid customers represent 8% of its total, compared with 6% for Vodafone Idea excluding machine-to-machine users.
- International revenue
- International roaming revenue generally contributes about 1–3% of telecom carrier revenue globally, according to Nomura.
- Top telecom pick
- Bharti Airtel remained Nomura’s preferred telecom stock.
Quotes
Nomura
Brokerage analysing Indian telecom stocks.
“In the near term, there may be minor revenue losses for telcos, but we think that with industry subscriber growth largely saturated, all three telcos would want to earn more from existing users, and premiumization is a way to achieve that. Vi's aggressive IR bundling may be a minor irritant for Bharti, which we think may wait to see the response and launch a similar bundled plan later.”
businesstoday.in
“We think that the latest differentiated offering from Vi is unlike what the telecom operators currently offer via bundling such as OTT, software, cloud, and Al model subscriptions. In international markets such as the US, Singapore, and the EU (by law), inclusive international roaming has been a mainstream plan feature for years.”
businesstoday.in
Sources
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