Vodafone Idea cuts ties with 25,000 retail partners to reduce costs

As competition in the telecom market rises due to competitive packages by Bharti Airtel and Reliance Jio, Vi is taking drastic cost-cutting measures

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Vodafone Idea, which has been facing financial constraints, has made a move to reduce costs by cutting ties with approximately 25,000 retail partners across India. Vodafone Idea, also known as Vi, decided to stop paying commissions to these partners in a bid to save money, according to media reports on Friday, June 16.

This announcement comes during a time when Vi has been dealing with ongoing struggles to retain its subscriber base, who have been switching to competitors like Reliance Jio Infocomm and Bharti Airtel.

According to a report by the Economic Times, Vi has a network of 400,000 to 500,000 retail touchpoints across the country. Most of these are multi-brand retailers offering services for many telecom companies. The report also states that many of these retailers were not contributing significantly to Vi's customer acquisition costs, therefore they will now be removed from the partnership.

In the March quarter, Vi reported that its consolidated loss had narrowed down to Rs 6,418.9 crore, while the revenue from its operations had increased by nearly three per cent to Rs 10,531.9 crore. It is worth noting that this marked the first annual growth in revenue from operations for Vi since the merger. The company attributed this growth to tariff hikes, improvements in the subscriber mix, and the addition of 4G subscribers according to a report by Mint.

However, as Business Standard earlier reported, Telecom Regulatory Authority of India (Trai) data showed that Vodafone Idea lost 1.21 million wireless users in March, resulting in a decrease in the mobile subscriber base from 237.9 million to 236.7 million. In an effort to revive its business, Vi had reportedly considered an equity infusion of Rs 14,000 crore.

This plan involved contributions from the company's existing promoters, such as the Aditya Birla Group and Vodafone Group Plc, who are expected to invest Rs 2,000 crore as fresh equity. The promoters have already invested Rs 5,000 crore since the government's telecom revival package in September 2021.