Vodafone Idea may go for fund raising after AGR verdict, plans tariff hike

Vodafone Idea has AGR dues of Rs 58, 254 crore and has sought fifteen year time frame to pay the dues
Vodafone Idea Managing Director and Chief Executive Ravinder Takkar on Friday hinted at tariff hikes and said any suggestion to discard 2G network was wrong as it provided low-cost service option to certain segment of the society. Around 58 per cent of Vodafone Idea’s 280 million customers are on 2G network.

The company will consider raising fund after the outcome of the adjusted gross revenue case in the Supreme Court, the management said in an analysts’ call on Friday, while highlighting a five-point strategy to increase revenue and profit. Vodafone Idea posted pre-tax loss of Rs 25,460 crore in the first quarter of this financial year due to lower revenue and provisioning. Its first quarter result was impacted by the Covid-19 lockdown and its average revenue per user (ARPU) fell sequentially as closure of stores limited recharge options.

Takkar’s five-point strategy to drive growth includes network investment in 16 top revenue-generating circles, initiatives to increase ARPU, focus on enterprise business, partnerships, and cost optimisation.

Last week, Reliance Industries Chairman Mukesh Ambani had said policy steps should be taken to make 2G part of history. Takkar did not name the Reliance chairman while making his observations.

He said the company would also focus on converting 2G subscribers to 4G network. He, however, said that 2G network provided a service option to a section of the society. Even in developed countries, 15 per cent of consumers use 2G, he said.

The Vodafone MD said current ARPUs in the industry were suppressed. While the telecom sector regulator was yet to take a call on the floor price, Takkar said there was an opportunity to increase tariffs.

The telecom company has AGR dues of Rs 58,254 crore and has sought 15 years timeframe to pay the dues. The Supreme Court is expected to pronounce its order on the timeframe. The company’s chief financial officer, Akshaya Moondra, said the court order would enable it to assess funding requirement and will take a suitable action post the order.

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