February 3, 2023

Vodafone Idea has launched nearly 1,100 new format physical touchpoints under the name Vi Shops across Tier 3 markets in 18 Indian states, as the cash-strapped telco strives to protect its rural consumer base which are increasingly emerging as significant targets of rivals Reliance Jio and Bharti Airtel.

These Vi Shops have been launched across multiple towns in Andhra Pradesh, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal as part of a three month long activity, the telco said in a statement Wednesday.

The new retail touchpoints have been introduced with an intent to deliver a uniform Vi experience to local customers as well as enable quick support and handholding, VIL said in a statement Wednesday.

The shops come equipped with signature elements of design that define existing Vi Stores in urban locations. Vi Shops offer the entire bouquet of Vi prepaid products and services and enable an enhanced customer experience and closer engagement.

Abhijit Kishore, chief operating officer, Vodafone Idea, said that the telco’s customer research showed that a large segment of customers, beyond metros, prefer the comfort and familiarity of face-to-face service.

“To enable the large rural population to be part of the digital revolution, we have taken a renewed approach to our rural retail strategy by introducing the concept of Vi Shops across multiple small towns and tier 3 markets,” he added.

Analysts have maintained that Vi’s deepening financial crisis coupled with peers Reliance Jio and Bharti Airtel’s aggression in 5G rollouts, and their increased focus on high paying customers and rural market penetration, makes the cash strapped telco vulnerable to further erosion in market share.Jio has already made inroads into the rural market, scaling its consumer base to 185 million as on October 31, 2022 according to subscriber data put out by the Telecom Regulatory Authority of India (Trai).

Airtel has identified rural as a key growth area to bridge the gap between its subs base and that of Jio, the market leader. In the past, erstwhile Idea Cellular had a significant presence in the rural markets. This user base for VIL however is now under threat as Airtel ramps up efforts to acquire more rural customers.

Gopal Vittal, Airtel’s chief executive said in the Q2 analyst call that the telco is “now seeing over 40 percent of industry 4G net adds coming from rural areas and (we) believe the time is right to bridge a substantial part of the coverage gap in mobile against the leading player in the industry”.

VIL’s rural userbase has been on a decline over the past few years, ceding users to competitors. According to the monthly Trai subscriber data VIL’s rural market base has decline from 157 million in October 2020, to 136 million in October 2021, and finally to 121 million in October 2022.

It has lost customers to competitors as Airtel’s base in rural markets grew from 156 million in October 2020, to 170 million in October 2021, and 177 million in October 2022. Jio’s rural market base has seen similar growth, though it has slowed down in 2022. It had 171 million rural customers in October 2020, which grew to 184 million in 2021, and was 185 million at October 2022 end.

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