Voda Idea must better services to plug user churn, say experts
Analysts say make customer centricity a priority to improve performance and reassure stakeholders
In the wake of the huge losses reported last week by Vodafone Idea, analysts tracking its stakeholders and employee sentiment say the management must take a stronger customercentric approach.
The company is exploring ways to monetise 160,000 km of optic fibre, as well as its data centre business — apart from seeking relief measures from the central government. Chief executive Ravinder Takker has also welcomed potential moves by the telecom regulatory body to review floor pricing, as something that could help the sector.
In the September quarter, its subscriber base slipped by another nine million, a reduced churn rate from earlier, to 311.1 million. In comparison, at the close of the same quarter a year before, the number was 422 million. And, average revenue per user (Arpu) was ~107, compared to Rs 108 in the earlier June quarter.
Sector analysts noted that apart from exceptional items in the balance sheet, the company had performed fairly inline with estimates.
“The good news is that the churn on 4G (fourth-generation technology) sites (the high value customer base) for the 4G customer base is actually significantly lower than non-4g,” said Takker. He added that churn is higher in the 2G base but they expected this to stabilise soon, with the company introducing a Rs 45 recharge to entice this base.
Amit Pau, a long-time former Vodafone managing director, currently operations chief at Accloud, notes: “Since the merger (of Vodafone with Idea) the operator has lost over 100 million subscribers. What might have happened is that when you merge two companies, people end up focusing on cost synergies and network rationalisation, while losing focus on customer centricity and allowing competition to storm the market."
Pau adds that in a highly competitive market, Vodafone Idea has fallen behind its rivals on 4G coverage and network performance.
During the quarter, the company added 5.5 million 4G customers (from 4.1 million at the close of the June quarter), taking its 4G subscriber base to 90.3 million. Data usage volumes, while improving, are still behind Airtel and Jio.
A significant chunk of both Vodafone Idea and Airtel’s capital expenditure outgo goes to telecom equipment providers. While their largest such providers, Ericsson and Nokia, did not respond to queries on the future of their partnerships with the operator, industry sources have confirmed that the companies held internal meetings to assess the scenario. And, found their engagement with operators to be stable at present.
On the employee front, however, there is significant uncertainty. According to reports, Takker addressed the 10,000-odd employees, mentioning their outreach to the government for relief.
Kris Laxmikanth, chief executive at Head Hunters India, said: “Telecom operators have already rationalised their workforce over the past year; they have the best resources in the sector, at present. Given the fact that there are few opportunities in the sector, it is not likely for companies to start layoffs."
This lack of opportunities would mean that voluntary attrition is not likely to jump, he added.
Rituparna Chakraborty, executive vice-president at Teamlease Services, estimates around 150,000 professionals directly employed with the sector, after the rationalisation over the past three years. “The core network professionals will continue to be relevant, as network operations will be in demand. But, the replaceable skill sets like those in front office roles face some uncertainty,” he added.