‘Smart move’: Vodafone Idea bundles free roaming to chase subscribers; Nomura stays ‘Neutral’

The latest market report highlights that Vodafone Idea’s decision to bundle free international roaming with its prepaid, postpaid and enterprise plans is a “smart move” aimed at subscriber retention and expansion, although it could come at the cost of some average topline per user (ARPU), Nomura stated in a latest note on Tuesday.

Last week, Vi introduced free international roaming (IR) with postpaid plans starting at Rs 501, annual prepaid unlimited data plans, and corporate plans starting at Rs 451 for enterprise customers.

This is the first time free IR has been offered on mass-market prepaid, postpaid and enterprise plans as a standard inclusion rather than as a paid add-on pack, Nomura stated.

“We think that the latest differentiated offering from Vi is unlike what the telecom operators at present offer via bundling such as OTT, software, cloud, and AI model subscriptions,” the brokerage stated.

Nomura stated the strategy could be aimed at attracting premium customers from Airtel and Jio. For prepaid customers, the free IR benefit is only applicable to annual plans, which could help Vi “nudge its existing premium customers to move to annual recharge plans”, reducing churn and improving working capital.

“Overall, we think it's a smart move by Vi aimed more at subscriber retention (and expansion) by sacrificing a bit on ARPU, though overall topline may be positively impacted due to improved traction on subscriber expansion,” Nomura stated.

Airtel faces greater IR exposure

International roaming topline across Indian telcos generally contributes a small fraction of total carrier topline, at 1-3% globally, and comes almost exclusively from high-ARPU postpaid and corporate accounts.

Bharti Airtel’s postpaid subscribers account for around 8% of its total base, compared with around 6% for Vi, excluding M2M. This implies Bharti is more exposed to IR-related topline loss if bundling becomes an industry norm, Nomura stated.

In the near term, there may be minor topline losses for telcos. But with industry subscriber expansion largely saturated, “all three telcos would want to earn more from existing users, and premiumization is a way to achieve that.”

Nomura stated Vi’s aggressive IR bundling may be a minor irritant for Bharti, which may wait to see the response before rolling out a similar bundled plan.

Nomura keeps expect an industrywide tariff hike of around 15% in 3QFY27F.

The brokerage forecasts around 14% consolidated EBITDA CAGR for Bharti and Reliance Jio over FY26-29F, and around 15% for Vodafone Idea on a softer base amid improving operating metrics.

Nomura maintains its ‘Neutral’ rating on Vodafone Idea, citing a “significant valuation premium vs Bharti” and a stretched cash flow situation. Bharti stays its top pick among the telecom stocks under coverage.