India / Vodafone Idea rebrands itself as 'Vi'

Technical Desk: Vodafone Idea Ltd on Monday will announce its integration into one brand called 'VI', two years after the completion of Vodafone India Ltd and Idea Cellular Ltd merger, said two people aware of the development. The rebranding is part of the company’s efforts to reduce cost of maintaining two brands, the people said, requesting anonymity.

Vodafone and Idea continued with their independent brand and advertising campaigns post the merger in August 2018. While Idea has been a mass rural-focused brand, Vodafone appeals to the premium urban crowd. The telecom operator, however, witnessed that the urban-rural appeal of the two brands took a hit under Vodafone Idea.

Earlier this year, Vodafone Idea announced a shift of its premium postpaid customer base to brand Vodafone from Idea as the management accepted that the latter did not have the brand value to charge a premium.

The rebranding decision comes amid the company’s plans to raise funds. Vodafone Idea on Friday said it will raise up to ₹25,000 crore. Its board approved fundraising after getting clarity from the Supreme Court on staggered payment of government dues.

The fundraising will be through the sale of shares or non-convertible debentures (NCDs). Both routes of fundraising have a limit of ₹15,000 crore each. The proposed fundraising is subject to regulatory and shareholders’ approvals. Vodafone Idea will take up the proposal at its annual general meeting on 30 September.

Mint had earlier reported, citing two people aware of the negotiations, that Amazon.com Inc. and Verizon Communications, the largest wireless carrier in the US, are set to resume talks to buy a significant stake in debt-ridden Vodafone Idea. The stake-sale talks were paused because of the case related to the adjusted gross revenue (AGR) dues.

The Supreme Court on 1 September granted telcos 10 years for payment of AGR dues. The court ordered an upfront payment of 10% on the total dues as demanded by the department of telecommunications (DoT) by 31 March. The remaining shall be paid in 10 equal instalments at an interest rate of 8%.

Telecom experts believe that Vodafone Idea needs fresh equity, higher tariff and concession in various government levies to continue operations besides paying the annual instalment of the AGR dues that include spectrum usage charges, license fee, interest, penalty and interest on penalty. Vodafone Idea owes the government ₹58,254 crore.

The mobile operator will need to more than double its average revenue per user (Arpu) to meet its AGR repayment obligations. Vodafone’s Arpu fell to ₹114 in the June quarter from ₹121 in the fourth quarter of fiscal year 2020.