Vodafone-Idea: How a court verdict boosted marketing spends

With the AGR reprieve in hand, the brand is all set to make the most of IPL’s reach that marketers say will help reposition itself    

e4m by Ruhail Amin
Updated: Sep 24, 2020 8:45 AM

Vodafone-Idea, the co-presenting sponsor for the ongoing IPL, is estimated to be spending close to Rs 120 crore on the sporting extravaganza. This comes soon after the Supreme Court reprieve for the telco, allowing it to pay up pending Adjusted Gross Revenue (AGR) dues over 10 years. Marketing experts see this as VI’s attempt to make the most of IPL’s reach, especially after its rebranding exercise.

Telecom companies like Vodafone and Idea have traditionally been big spenders on sporting events, especially cricket. However, post-2018 both the players significantly cut down their marketing spends owing to unfavourable market forces.

Court Order & Marketing Spends

Till a few months back, this kind of marketing spend by these telecom players was unimaginable. What has led to this loosening of purse strings possibly is the Supreme Court judgment that allowed Vodafone-Idea to pay up pending adjusted gross revenue (AGR) dues over a period of 10 years.  Telecom providers in India pay the Department of Telecommunications (DoT) 3-5% of their AGR in usage charges for spectrum or airwaves and 8% of AGR as licence fees.

Just to put it into perspective, Vodafone Idea owes Rs 58,000 crore in AGR dues. So, this judgment has given VI enough time to reposition itself.

According to Sapna Arora, CMO, OLX, in a mass category like telecom where the economies of scale are of consequence, you are either in the game or you are not.

Arora says that after the SC reprieve it would not have been difficult to build a case for investing and taking another stab at India’s telecom market, it being one of the last global bastions of growth.

“From a marketing perspective, VI needs to hit a refresh button in the minds of the consumers and establish that it’s here for the long haul, creating the promise of a credible partner. Re-branding is akin to launching a new brand and this needs to be broadly communicated. Enter IPL: Vodafone has been an IPL sponsor for 10 years and has seen the benefits of its massive reach,” she added.

Wait & Watch Time Over

“Giving them 10 years for payment with just 10% to be paid up by March definitely lightens the burden. The buzz and awareness they can get out of IPL will be amazing. This will definitely help them in picking up shares and sales,” pointed out Trupti Bhandari, former EVP at GSK and the author of ‘Pragmarketism’.

Brand Strategist Rakesh Mani says the judgment allows VI a chance to stay alive and play in extra time. But it is not a licence to continue as before: there are a couple of ‘goals’ to score for stability, he said - the first is raising capital from a stable partner and the second is raising tariffs.

“Marketing will be scrutinized for how it helps achieve these goals. If the buzz from IPL and T20 league is effective in generating activations, communicating greater perceived quality and value, and driving stickiness – then it is money well spent,” Mani added.

Although Vodafone had sought 15 years to clear its dues, even 10 years is being seen as a sufficient reprieve.

Soumya Mohanty, Chief Client Officer, Insights Division, Kantar, says Vodafone’s key focus will be to keep its customer base intact and aggressively focus on acquisition. “This needs positive news and strong visibility in the market. With IPL getting the eyeballs, it’s not surprising that they have chosen to invest, that is the best route in these circumstances. At Kantar, we are finding a lot of brands loosening their purse strings as the time to wait and watch seems to be over.”

According to Jyoti Kumar Bansal, former CEO of PHD Media India, the Supreme Court order has given some leeway to Vodafone Idea to plan ahead instead of the almost certain insolvency that they were staring at.

“IPL, with its reach and footprint, is ideal to break audience silos for communications targeting diverse segments. The timing of IPL matches, the launch of the new combined logo — both companies have individually used IPL to their advantage in the past so it is only natural that they will bank on it again to rebuild visibility with existing and new stakeholders,” Bansal noted.

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