Will not shy away from tariff hike: Vodafone Idea CEO Ravinder Takkar

Vodafone Idea MD Ravinder Takkar
Vodafone Idea will not shy away from taking the lead in hiking mobile tariffs, the company management said in its post-result conference call on Friday. The financially stressed telco also set a three-month timeline to complete its proposed fundraising by early 2021.


While the telecom company’s second-quarter loss narrowed to Rs 7,218 crore, its operational performance was weaker compared to its peers. The pending Rs 58,000-crore adjusted gross revenue (AGR) dues and the refinancing of bank guarantees remain a major concern.


Chief financial officer Akshaya Moondra said so far the company had received Rs 2,000 crore from Vodafone Plc and expected to get another Rs 6,400 crore from the UK parent company in indemnity payments under the 2017 merger agreement. These receipts from Vodafone Plc are linked to AGR dues, for which the next instalment will be due in March 2022.


Telecom companies have maintained that the current tariff levels are unsustainable but have not increased rates. On Friday, Vodafone Idea managing director Ravinder Takkar said the company would not shy away from taking the first step. “We have taken it before and we can take it again,” Takkar said and added that there were fairly strong indications that competitors would follow suit. In the post-result conference call, Bharti Airtel had also expressed its intention to raise tariffs soon.


In the first phase, the average revenue per user (ARPU) per month of telecom companies needs to increase to at least Rs 200, Takkar said.


A tariff hike will also help Vodafone Idea generate cash and cut down losses. While the company is focusing on 4G expansion and network improvements, its average revenue per user (ARPU) is Rs 119 whereas that of Airtel is Rs 162. On fund-raising, the company said the plans were on track.


In September, the company's board had approved plans to raise up to Rs 25,000 crore through a mix of debt and equity.


"We are in discussion with interested parties. Engagements are ongoing and progressing well," Takkar added.


Responding to a query on impact of Reliance Jio’s post-paid plans, Takkar said these were early days and that there had been little or no impact on its existing post-paid subscriber base. "Post-paid subscribers tend to be sticky and less price sensitive. This has been a factor for a long time,” he added.


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