Vodafone Idea on four-year ARPU growth run with user upgrades, AI-led pricing

Vodafone Idea’s average revenue per user (ARPU) has been increasing for the past 16 quarters despite the debt-laden telecom operator being on the back foot with 5G services, said its chief marketing officer Avneesh Khosla

He told ET that this has been achieved primarily by leveraging existing assets of the company and upgrading existing users to higher-value plans by differentiating through unlimited night data, data rollovers and bundled services.

“One of the larger things we have done is around the core propositions that we’ve built over the last couple of years, which was nothing but how do we differentiate from our competitor,” Khosla said.


However, Vi's ARPU, at Rs 177 as of the first quarter of this financial year, still lags behind its rivals.

“Tariff increases are important, but our ability to sweat out more revenue from existing customers will continue to happen. There is more scope to do so even without tariff increases," Khosla said.

However, the telecom operator considers a tariff hike inevitable in the near future. “Like any other category, there is inflation, and therefore tariff hardening will continue,” Khosla said, adding that future hikes will take a variable approach instead of a one-size-fits-all approach.

“There's a fair bit of work we do at the back end using machine learning and AI (artificial intelligence) models to accurately predict the consumers that can take tariff increases and those who will be price-inelastic,” he said.

Khosla said the telco’s ability to slow down subscriber losses in the past few quarters was largely driven by its improvement in network quality and the overall customer experience.

This was done by addressing network failures, improvement in customer services, introduction of differentiated prepaid offerings and communicating its network expansion.

Vodafone Idea’s customer losses declined to 0.5 million in the April-June quarter—its lowest since the Vodafone India and Idea Cellular merger in 2018, according to experts—from quarterly losses of 1.5-5 million till 2024-25,

The company’s 5G service, which is available in 29 cities across India as of August, is being introduced on the basis of weighted criteria depending on the 5G device concentration, higher ARPU customers and deployment in circles where current network capacity has been low, as 5G technology helps to offload capacity, Khosla said.

Vi, however, has no plans to launch fixed wireless access (FWA) to monetise its 5G network, he said, adding that the economics of FWA are not compelling because the company does not have a fibre-to-the-home offering.

“FWA customers use significantly more capacity than mobile broadband customers, almost six to seven times. But despite the massive capacity consumption, the ARPU multiple is not as high. The resource spent is not being aggressively compensated,” Khosla said.

Following successful rounds of equity funding and debt funding, including having the government as its largest shareholder, Vi plans to address the perception of the company struggling to survive through marketing campaigns in the near future, he said.


“The goal is that as more consumers experience the new and reinforced network, particularly 5G, this will start cementing and building the perception that the brand is here to stay,” Khosla said.