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Q3 performance: Loss of subscribers because of price hike, says Vodafone Idea

To a query on another price increase, Ravinder Takkar, MD & CEO, Vodafone Idea, said certainly there would be a price hike but the timing has to be seen, it may happen in 2022 or maybe 2023.

The majority of BGs, amounting to Rs 15,000 crore are related to spectrum, which will soon be returned by DoT after completing the formalities.
The majority of BGs, amounting to Rs 15,000 crore are related to spectrum, which will soon be returned by DoT after completing the formalities.

Vodafone Idea on Monday downplayed the loss of subscribers during the October-December 2021 quarter, terming it a result of tariff hikes, which led to SIM consolidation while maintaining that it continues to grow its 4G base. The company also expects to complete the fundraising in the current fiscal.

“Normally, when price increase takes place, two-three things happen, one is that recharges slow down a bit for few days, second, we see a phenomenon of SIM consolidation… our subscriber losses very much can be attributed to the price increase,” Ravinder Takkar, MD & CEO, Vodafone Idea, said during an analyst call on the Q3 results.

Asked if the tariff hike also impacted the usage of consumers, Takkar said there was not any big impact because prices are still very affordable. Vodafone Idea lost 5.8 million subscribers in 3Q22 (vs 2.4 million loss in 2Q22), while the 4G subscriber base increased marginally to 117 million vs 116.2 million in 2Q22. As a result of the price hike, the average revenue per user (Arpu) of Vodafone Idea increased to Rs 115 for the October-December quarter from Rs 109 in the preceding quarter.

The company expects the full impact of the price hike to come in Q4. “Significant amount of impact will come in next quarter,” Takkar said. To a query on another price increase, Takkar said certainly there would be a price hike but the timing has to be seen, it may happen in 2022 or maybe 2023.

“The last hike (November 2021) took place almost after two years, so we certainly look at less than two years for the next hike,” he added. The top executive also reiterated that the company expects to complete the fundraising in the current financial year. It had been planning to raise Rs 25,000 crore for the last over one year. The capital expenditure by the company will also see an upward trend once the fundraising has been completed as the company will focus on improving the 4G coverage. 

 The company expects that Rs 17,000 crore worth of bank guarantees (BGs) will be returned to it. It has already received over Rs 1,000 crore worth of BGs from the Department of Telecommunications (DoT) related to the licence fee. The majority of BGs, amounting to Rs 15,000 crore are related to spectrum, which will soon be returned by DoT after completing the formalities.

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