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Vodafone Idea freefall trickles down to India’s telecom sector

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Vodafone Idea’s (VI) fate is now controlled by the Indian government as the impending demise could immensely affect telecommunication service rivals, stakeholders, and the government, resulting in catastrophic outcomes on the country’s telecom sector.

India’s telecommunication sector is wielding its final strategies to push itself from the underlying financial concerns, with Aditya Birla Group’s subsidiary, Vodaphone Idea, praying for supreme governmental reforms to prevent its fall from grace.

On Tuesday, the telco’s shares reached a soaring 11 percent on the Bombay Stock Exchange (BSE) throughout condensed share trading volumes in a subdued market. At 10:40 AM, the firm’s stock was up 8 percent, with an accumulated 491 million equity shares traded in India’s National Stock Exchange (NSE) and BSE.

In its last six trading days, the telecom company attained 34 percent after hitting a 52-week low last month. This came as a follow-up to the firm’s request to the Department of Telecommunications (DoT) to adjust arithmetic errors in the computation of Adjusted Gross Revenue (AGR) demands – which in return was denied by the Supreme Court concerning modification application requested by the firm and various operators.

AGR is the usage and licensing fee that the telecom operators are charged by the DoT. It is categorized into different spectrum usage charges and licensing fees typically pegged between three to five percent.

In response to the DoT’s order, Vodafone Idea submitted a review petition that rejected the order, which is currently pending a final response.

“Your company is disappointed by the verdict and will take further legal recourse as appropriate. Your company believes the government recognizes the criticality of the sector and the importance of retaining healthy competition amongst private sector operators. Your company’s robust wireless digital infrastructure covering 1.2 billion population for mobile telecommunication services has played a key role in nation-building and is critical for the country’s Digital India Mission,” Vodafone Idea disclosed in the financial year 2020-2021 annual report.

Last week, chairman of global conglomerate Aditya Birla Group Kumar Mangalam Birla – who resigned as Vodafone Idea’s chairman in August – and Vodafone Group CEO Nick Read conducted a meeting with the Indian governmental figures in New Delhi, in hopes to recoup their joint project from what seems to be its destined financial demise.

The meeting was called upon due to Vodafone Idea’s fundamental need to acquire a bailout package from lenders and the government, to sustain its existence and position in the industry.

It is worth mentioning that Aditya Birla Group owns 27.6 percent, while U.K.-listed Vodafone owns 44.3 percent of the mobile telecom operator’s shares.

“Vodafone Idea Limited (VIL) has been under financial stress as reflected by mounting losses and burgeoning debt levels, which is likely to impact its financial lenders as well as Government, apart from having a bearing on its employees, its subscribers, and associated industries, most prominently towers,” revealed a report by the Indian agency ICRA.

At this point, governmental support is a necessity and not a luxury, as it could be the only aspect that could pull the company from the financial depression it is sinking in. Legal support could take the form of procrastinating any spectrum dues accumulated on the telco, reduction in levies, and reduction in interest rates.

Vodafone Idea’s overwhelming financial burden is led by its $26 billion debt, not excluding spectrum payment obligations, AGR liability due to the government, banks, and financial institutions’ liabilities.

Due to the telco’s monetary burden, the ICRA revealed that the country’s towers will most prominently be affected since there are approximately 550,000 towers connected to the company – with a singular tower obtaining various tenancies.

In the event of the telco service provider’s vacancy in the sector, the tower industry might need to fill in the void left by around 180,000 tenancies that the company is currently fulfilling their roles, with only 40 to 50 percent of them are likely to be reclaimed by tower companies between 18 to 24 months.

While India’s telecommunication sector is most likely to suffer from excruciating financial pressure due to what could be Vodafone Idea’s free-fall, the telco demonstrates optimism that the government will give much-needed support to focus on and handle any problems the sector is currently facing and might encounter.

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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