Floor price must for sector health; company not shy to take first step on tariff hike issue: Vodafone Idea

By: |
October 30, 2020 9:03 PM

The telco said that it expects to receive nearly Rs 6,400 crore from Vodafone towards Adjusted Gross revenue (AGR) liability, under an indemnity arrangement.

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Telecom operator Vodafone Idea on Friday said there is nothing that stops the industry from increasing prices, even as floor price discussions are on and that it would not shy away from taking first step in this regard. The telco further said that it expects to receive nearly Rs 6,400 crore from Vodafone towards Adjusted Gross revenue (AGR) liability, under an indemnity arrangement.

At an investor call post Q2FY21 earnings, Vodafone Idea MD and CEO Ravinder Takkar said that in order to maintain a healthy competition and for health of the industry probably a “floor pricing will be required”. “I don’t think that there is anything that stops the industry from increasing prices, while floor price discussion is in place. It has been done before and I don’t see any reason why it can’t be done again,” Takkar said.

Vodafone Idea will not hesitate to take the first step in this regard, he emphasised. “From our perspective…we are not shy to take the first step, we have taken it before, and we could take it again,” he said. On the AGR issue, VIL Chief Financial Officer Akshaya Moondra said that the company expects to get roughly Rs 6,400 crore from Vodafone Group towards statutory dues payment, as part of an indemnity arrangement.

“…total cap on the indemnity to be paid by Vodafone Group under this arrangement is about Rs 84 billion…Under the current payment in Q1 and Q2 cumulatively, we have received Rs 20 billion so balance Rs 64 billion is to be received over the remaining period against the AGR liability,” Moondra said.

Vodafone Idea on Thursday reported significant narrowing of losses to about Rs 7,218 crore for the September quarter and said signs of recovery were visible with gradual improvement in economic activities. The debt-laden VIL’s losses in the Q2FY20 had been Rs 50,921.9 crore, after it provisioned for Supreme Court mandated statutory dues.
In its earnings statement, VIL had however struck a note of caution saying its ability to continue as going concern is dependent on successful negotiations with lenders and ability to generate the cash flow that it needs to settle / refinance liabilities and guarantees as they fall due.

The gross revenue for quarter ended September 30, 2020 came in at about Rs 10,791 crore, marginally lower than same period previous year. Revenue was, however, 1.2 per cent higher when compared sequentially, and the company had noted that the impact of nationwide COVID-19 lockdown has gradually started to ease.

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