Vodafone Idea's Exiting The Market May Do More Harm Than Good For Airtel

As Vodafone Idea shows signs of collapsing under the Rs. 53,000 crore adjusted gross revenue, Bharti Airtel might lose the benefits brought about by shared towers, and you, the customers, might have to say goodbye to offers like Airtel smartbytes.

Analysts believe that this might result in a 15% additional cost and affect Airtel’s ability to offer a more affordable tariff to Indian consumers.

Airtel needs a trusted partner like Vodafone Idea to survive the brutal challenges lying ahead, especially when Reliance Jio Infocomm is getting stronger and recently becomes the market leader. Gopal Vittal, CEO of Airtel said that Vodafone Idea needed to survive so that India can still be a three-player market.

According to Rajiv Sharma, the research head of SBICap Securities, Bharti Airtel might have a tough time keeping the low-cost business model, especially its Airtel smartbytes, if Vodafone Idea collapses.

Indus and other tower companies may have helped the two telcos to have some external capital and the shared model also makes it possible for both Bharti Airtel and Vodafone Idea to follow the low-cost approach.

Bharti Airtel has commented nothing on this story.

As stated by Nitin Soni, director of Fitch, a global rating agency, Vodafone Idea being removed from the picture could mean an increase in cost for future tower contracts of Airtel, assuming that the merger between Bharti Infratel and Indus goes well. He thinks that Airtel might gain more customers when Vodafone Idea exits, which could offset any increase in cost.

However, Sharma disagrees. He projected that while Airtel might win 40% more customers, especially with good approaches, like Airtel smartbytes, when Vodafone Idea shuts down, it will lose a partner that can help with regulatory issues, which is another worry for the company.

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