Two years after Vodafone, then the country’s second largest telecom company, and Aditya Birla Group-owned Idea Cellular merged to form Vodafone Idea, the company on Monday launched a new brand identity Vi.
On August 31, 2018, Vodafone India merged with Idea Cellular and the merged entity was renamed Vodafone Idea Limited. Even after the merger, however, the entity continued to use both the brands Vodafone and Idea. Earlier this year, the brand Idea was dropped from postpaid plans with all the customers being moved to Vodafone Red postpaid.
The new brand Vi is its new unified consumer brand identity and positioning.
“This is an important next step to launch our new unified business under a new unified brand. As the integration of the two businesses is now complete, it's time for a fresh start,” said Nick Read, CEO, Vodafone Group Plc.
Starting Monday, Vi advertisements will be aired on TV and digital platforms, followed by a high decibel intensive multi-media campaign. The brand buzz will then continue in the market over the coming weeks, Kavita Nair, Vodaone Idea’s chief digital transformation and brand officer, said.
When Vodafone Idea merged, it had become the largest telecom company in the country with over 400 million customers. However, in recent quarters, it has lost a lot of customers. The company’s survival was dealt a blow when the Supreme Court ruled in the favour of the Department of Telecom on the issue of adjusted gross revenue (AGR) last year. The company’s chairman Kumar Mangalam Birla had even said in December 2019 that the company may shut shop if there was no government support.
Last week, the Supreme Court gave its final verdict in the AGR case, allowing the telecom companies to pay their AGR dues staggered over a period of 10 years. Vodafone Idea owes Rs 58,000 crore in AGR dues, of which it has so far paid Rs 7,854 crore. The SC verdict clears the near-term overhang over Vodafone Idea, but its troubles are far from over.
Analysts have pointed out that the company will have to pay Rs 7,500 crore annually and therefore, feel fresh investments as well as a substantial rise in tariffs would still be required.
On Friday, Vodafone Idea said it would raise up to Rs 25,000 crore in fresh capital. There is speculation that US wireless carrier Verizon and e-commerce giant Amazon are exploring investments in Vodafone Idea, although the company has so far denied that any such deal is on the table.
“To survive in the industry in the long run, Vodafone Idea needs to raise the required amount of funds, develop a turnaround strategy and hope that industry takes a steep hike in ARPU (average revenue per user) or suitable floor tariff gets implemented by the TRAI,” said Keshav Lahoti, associate equity analyst at Angel Broking.
The new brand identity in a way is a new beginning and a renewed marketing push by the company, which has lost more than 100 million customers to rivals Bharti Airtel and Reliance Jio since the time it announced the merger in 2018.
“The rationale for the JV Vodafone Idea remains unchanged, which is to create a leading future fit telecom player with scale. The merger a couple of years ago meant to start a journey of integrating two mammoth networks and companies in one seamless entity. Today, we come to the final stage of integration as we announce one unified brand. The new brand identity is a reflection of the two brands Vodafone and Idea coming together for future,” said Birla.
Ravinder Takker, the MD and CEO of Vodafone Idea, said the company was now leaner and agile and the deployment of many principles of 5G architecture has helped it transform into a future-fit digital network for the changing customer needs.
Vodafone Idea shares have surged over 40 per cent since the AGR verdict was announced by Supreme Court on September 1 and the stock was trading at Rs 12.48, up around 4 per cent on Monday.