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India’s relief package may not resurrect Vodafone Idea

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Indian telecom operator Vodafone Idea might not have enough financial sturdiness to pull itself out of its accumulated $30 billion debt, despite governmental deliberation of a four-year moratorium on paying overblown past dues.

Vodafone Idea’s extravagant debt of almost $30 billion is a result of the Indian government’s pressure on its telecom sector and telcos. The authority’s ruthless push for its telecom operators to pay spectrums has expanded on years, pushing them to an unfathomable level of despair to take any solution thrown at them to pull themselves out of the financial obligation to the government.

Just before Vodafone Idea Ltd. was about to sink its hopes with its enormous debt, the Indian government threw the long-awaited lifeline, giving the domestic U.K. telco a bit of a breather.

It was clear that when Vodafone’s former chairman, Kumaramangalam Birla, who currently owns 28 percent of the company’s shares resigned from his position, then sent a letter to the government offering his shares in the telco for free, that things were not working according to plan for Vodafone Idea.

However, even if Birla’s shares were controlled by a governmental presence, the fact of this case remains that both state-backed telcos Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), are both suffering from severe financial distress as both firms are bankrupt, immensely inefficient, and currently unable to pay salaries with the value of their shares curtailing.

In parallel, the government’s relief package was meant to bring some relief to the suffering telco and bring them back on their feet. Yet, it seems that there is so much relying on the relief package, it might not be enough to secure a rejuvenating resurrection for Vodafone Idea.

From one side, debt has been accumulating on the tormented telco. On the other side, its counterpart, Bharati Airtel, is also exposed to similar burdens. A factor halting any attempts Airtel could make to pull out Vodafone from its financial topple.

Here, the accumulated debts on Vodafone Idea resulting from a tax clout by the previous government’s tax department have mightily affected the operator’s revenues. The company was forced to complete capital gains tax payments from Idea’s acquisition of Hutchison Essar Telecom Company that took part five years ago.

From there, New Delhi’s 1999 telecom policy resurfaced to the scene, stating that since interest income and sale of assets play a part in augmenting telecoms’ revenue margin, they should be exposed to tax laws, issuing the non-telecom operational revenue policies, or as referred to as Adjusted Gross Revenue (AGR).

The pressure Vodafone Idea is enduring could be considered both self-made and imposed by the government. Even though the relief package could bring some consolation to the suffering telco in the short run, the same cannot be said about the far future.

While accumulative taxation has been exterminated by a Bill to reform India’s Income Tax Act, easing the excruciating suffering resulting from AGR dues, Vodafone Idea, alongside Reliance, will not break free from the past four years’ grown interest and penalties.

Even though the distressed mobile operator might get a slight breather to pay its delayed spectrum purchases in previous auctions, in addition to the solicited relief from the bank for its past dues – an estimate of $4.3 billion – the telecom company’s current financial status could halt any relief encompassing momentary liquidity.

Daryn is a technical writer with thorough history and experience in both academic and digital writing fields.

Telecoms

China’s 5G smartphone rollout hits 70% in 2021

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More than 70 percent of China’s 5G smartphones are driven by the country’s expanded network coverage and ampler models’ options, resulting in an 8.1 percent rise in sales for fifth-generation network devices.

China, a country with a mindset focused on usurping the U.S. from its throne as the world’s largest economy, is impressively playing the manufacturing field in a battle for the soul of global tech.

5G smartphones marked an impressive growth in reference to expanded network coverage and diversified bundles of models, a factor highlighted by the ever-growing device manufacturing of affordable varieties.

According to the Shanghai Daily, in September alone, the country’s sales margin hit 21.4 million units, an 8.1 percent decline from last year. However, 5G models marked a distinctive margin with 15.1 million units’ sales, leaping by 8.1 percent and resulting in 70.5 percent of total sales.

The China Academy of Information and Communications Technology (CAICT), in association with the Ministry of Industry and Information Technology, revealed state-owned telco China Mobile reported 956 million mobile users during September, with 331 million being 5G consumers.

In its third quarter, the world’s biggest mobile operator welcomed 10.2 million additional users, with the majority being 5G advocates, the telco said on Thursday.

In parallel, Big Tech giant Apple, alongside smartphones manufacturers Samsung, Oppo, and Vivo, have also initiated their 5G production plans in China.

The rising demand for Chinese manufactured 5G smartphones is merging from its low-cost influence. At the moment, 5G products cost less than $234, a factor that has been playing an influential role in heightening market demand from users, paving the way for a lesser threshold to fifth-generation networks.

In August, China Mobile, alongside the entirety of other local carriers, reported superior half-yearly performance in the last couple of years, as the country sustains a substantial digital transformation shift.

“As an early starter, China is giving mounting attention to 5G development and positioning it as a basis for national infrastructure building. That leaves carriers huge opportunities to expand their businesses,” veteran telecommunication industry analyst, Ma Jihua, informed The Global Times. 

The steering impact of vigorous 5G rollout in mainland China is manifesting itself as one of the leading factors to rising profits for the country’s domestic telcos, as long as consumer rate stays on an exponential rise as users take a higher interest in 5G technology.

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Vodafone adds 7,000 software engineers to target digital services

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Vodafone unveiled plans to add nearly 7,000 software engineers to its expanding European-wide technical workforce by 2025, through a combination of recruitment, re-skilling existing employees and insourcing.

The company said in a statement, that “Expanding its software capabilities will allow Vodafone to build differentiated products and services at lower cost and own the intellectual property (IP) rather than sourcing them through suppliers. Insourcing expertise generates savings of 20 percent, on average, for Vodafone.”

The move is part of Vodafone’s increased investment to meet surging demand for digital connectivity, which is growing by up to 50 percent every year, and has been accelerated by the pandemic.

By bringing more software skills in-house, Vodafone is driving forward its strategy to transform from a traditional telecommunications company to a new generation connectivity and digital services provider of scale across Europe and Africa.

Johan Wibergh, Chief Technology Officer of Vodafone, said: “Vodafone is rapidly shifting up the gears to support the dramatic digital transformation that businesses and society are undergoing. We are building a global software brand with a diverse and inclusive culture, providing superfast connectivity and powerful digital products – however and wherever customers want to use them.”

By 2025, more than 50 percent of all employees within Vodafone Technology will work in software engineering. Vodacom, part of Vodafone Group, is also adopting a similar strategy through the extension of digital and financial services across Africa. 

Software engineers at Vodafone will benefit from the company’s new technical career path, designed to recognise and develop technology experts into senior roles within Vodafone. They will be given the freedom to experiment and invent new services using cloud native digital architecture which will be made available to 300 million mobile customers, 28 million fixed broadband and 22 million TV customers via platforms built by Vodafone Technology.

With the springboard of a major investment of $9 billion in the last financial year, Vodafone Technology is already well advanced with its plans, based on its Tech2025 strategic blueprint

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Overcoming telecoms industry challenges: Tackling the key problems

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Overcoming telecoms industry challenges: Tackling the key problems

According to analysis by Digital Commerce 360, 81 percent of buyers used digital channels to make telecom-related purchases during COVID-19, and 36 percent plan to use digital channels more in 2021. However, the rise of digitalisation presents telecommunications with both opportunities and challenges.

Telecommunications is an industry battling constant change. A lack of connectivity in rural areas, hurdles to the full fifth generation (5G) rollout and the impact from the pandemic are just some of many challenges it must overcome in order to thrive.

And that’s not all. In an increasingly competitive market, customer demands for a faster and more personalised service mean that telcos of all sizes are constantly needing to adapt to stay ahead. To help telecommunications companies navigate an ever-changing landscape, software provider Mobilise, which has worked with service providers including Virgin and Red Bull Mobile, has shed light on some of the key challenges telcos face in 2021.

Digitalisation, competition between operators and the use of data analytics all need to be understood and overcome. Firstly, digitalisation impacts every step of the customer journey. eSIMs, for example, will be compatible in 60 percent of smartphones by 2025 and represent a significant opportunity for providers.

Mobilise provides eSIM as a service, supported by Mobilise’s M-Connect digital platform, to help service providers accelerate eSIM adoption while minimising costs, time to market and project risks. Onboarding customers with eSIMs, in place of traditional SIM cards, allows instant onboarding to encourage a more streamlined activation process. In addition, telcos can reduce logistics costs and can target the wider market for eSIM-enabled devices. Without seriously considering eSIMs, telcos could risk losing customers to other providers.

In addition, telcos must consider how customer expectations are changing. They want more flexibility, personalisation, and more meaningful interactions with providers. Competition between mobile network operators (MNOs) and mobile virtual network operators (MVNOs) is fierce. Smaller MVNOs are trying to keep up with their larger counterparts, and as customer expectations change, MVNOs must define their niche.

In addition, the M-Connect platform supports several other customisable services that can help MVNOs to better position themselves in the industry. The interface enables customers to buy and manage subscriptions independently and permits sales and customer service staff to manage customer demands with greater agility. “With M-Connect we’ve seen companies improve their net promoter score (NPS) by 25 percent.

M-Connect also enables advanced data analytics, an area that has thus far seen slow adoption across the industry. Previously, analytics, reporting and data management have largely been regarded as ’add-ons‘. However, we believe that analytics should be mandatory.

Analytical tools can be used to monitor how customers interact with a telecoms service, providing opportunity to enhance the user’s experience. This can incorporate technologies including artificial intelligence, which can be used to predict and prevent churn and improve customer retention.

Telcos must pay attention to changes in industry and the shifting expectations of their customers. Integrating technologies such as eSIMs and predictive analytics offers many operational and user benefits that could be key to overcoming common challenges.

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