‘Vi’ are here to stay: Vodafone Idea readies to hike tariffs, looking at Arpu of Rs 200 for now

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September 8, 2020 7:15 AM

As reported earlier, Vodafone Idea needs to pay total outstanding AGR dues of Rs 50,250 crore, which would entail an annual instalment of around Rs 7,000 crore, including interest from FY23 till 2031. Concurrent to this during this period it also needs to pay around Rs 16,000 crore as deferred spectrum instalment.

Vodafone and Idea, which merged at the company level in August 2018, on Monday also announced the unification of the brand, which will now be called ‘Vi’.

Days after getting a nod from its board for a fundraise of up to Rs 25,000 crore through a combination of share sale and debt, Vodafone Idea on Monday signalled that it’s ready to take the first step towards raising tariffs which was required for the health of the telecom sector.

Addressing a virtual roundtable of editors, Vodafone Idea CEO Ravinder Takkar said the government and regulator should also do their bit towards sustenance of the the sector by way of fixing a floor price for tariffs which was the need of the hour.

On Vodafone Plc’s stand of not putting in anymore equity in the company and whether the other promoter, Aditya Birla Group, would put in more money, Takkar said he could not answer on the behalf of the promoters and whether they would participate in the fundraise, but added that they have supported the company’s efforts to raise funds.

On tariff hike, he said the company has raised it twice since the merger and is ready to take the first step again. According to him, the average revenue per user needs to first reach the Rs 200 range and then move beyond to Rs 300. In the June quarter, Vodafone Idea’s Arpu was at Rs 114. Takkar said consumers are ready to pay more for quality of service.

Vodafone and Idea, which merged at the company level in August 2018, on Monday also announced the unification of the brand, which will now be called ‘Vi’.

Takkar termed the recent Supreme Court order allowing for a 10-year period for payment of the telcos’ adjusted gross revenue (AGR) dues as an important step and said it will be something that will be very useful for the company’s journey for the next 10 years. “We are very thankful to the court for allowing us payments over this 10-year period,” he added.

As reported earlier, Vodafone Idea needs to pay total outstanding AGR dues of Rs 50,250 crore, which would entail an annual instalment of around Rs 7,000 crore, including interest from FY23 till 2031. Concurrent to this during this period it also needs to pay around Rs 16,000 crore as deferred spectrum instalment.

At the end of June quarter, the company hardly had cash on its books with its cash and cash equivalents at Rs 3,450 crore and a net debt of Rs 1.16 lakh crore. The company would get around Rs 6,870 crore from Vodafone Plc, which would be the latter’s share towards merger liabilities (Vodafone and Idea had merged in August 2018).

According to analysts, the company needs a combination of quick, sharp improvement in pricing, flawless delivery on the fresh opex cut targets, competitive network spends to stem the trend of market share erosion and some equity infusion.

The company had posted one of its biggest losses during the April-June quarter at Rs 25,467 crore, largely due to provisioning for AGR dues. Operationally, Vodafone Idea has continued to lose market share ― it lost 11.3 million subscribers during the April-June quarter to 279.8 million in total, including 1 million 4G subscribers taking the number to 104.6 million, and total data subscribers declined by 3.8 million to 135.7 million.

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