Voda-Idea rejigs corporate post-paid plans

By: |
July 27, 2021 5:00 AM

Tweaking its `299 monthly plan, Vodafone Idea has reduced the data benefits to 30 GB against 40 GB earlier. The company though has introduced a Rs 349 monthly plan, which offers 40 GB data. So, if a customer wants to consume the same amount of data, he/she has to move to a higher plan, which costs Rs 50 more.

The significant amount of cash required to service its debt, leaves limited upside opportunity for equity holders, despite the high operating leverage opportunity from any source of ARPU increase.The significant amount of cash required to service its debt, leaves limited upside opportunity for equity holders, despite the high operating leverage opportunity from any source of ARPU increase.

After Bharti Airtel, Vodafone Idea has also restructured its enterprise post-paid tariffs, in a bid to improve realisation per customer. However, Vodafone Idea has not increased headline tariffs but has reduced data benefits in a couple of plans while introducing a new Rs 349 monthly plan.

Vodafone Idea has around 25% corporate post-paid users in its overall mobile base, which is highest in the industry. But as the company has not increased headline tariffs, the tinkering in enterprise post-paid plans is not going to yield a good average revenue per user (Arpu) jump for the company. The company has the lowest Arpu of Rs 107 per month among the three private operators and needs to raise tariffs substantially, including in the pre-paid segment, to remain financially viable.

Tweaking its `299 monthly plan, Vodafone Idea has reduced the data benefits to 30 GB against 40 GB earlier. The company though has introduced a Rs 349 monthly plan, which offers 40 GB data. So, if a customer wants to consume the same amount of data, he/she has to move to a higher plan, which costs Rs 50 more.

Similarly, the Rs 399 plan now offers 60 GB data compared to 75 GB earlier. The company has not touched the Rs 499 plan, which continues to offer 100 GB data, and the Rs 799 plan, which comes with 175 GB data.

Analysts feel that Vodafone Idea needs to do much more to increase revenues, like by increasing headline tariffs, if it wants to survive in the market. The refusal by Supreme Court to allow recalculation of adjusted gross revenues (AGR) dues, has dealt a body blow to the company. The company has not been able to close a fund raise to the tune of Rs 25,000 crore, which was announced in September last year.

In its post-earnings call with analysts on July 2, Vodafone Idea had said that it was unable to unilaterally raise tariffs, which is affecting its fundraising plans, and once again sought regulatory intervention for fixing floor price for telecom tariffs.

The overall post-paid market is worth around Rs 22,000 crore in revenue terms and forms 15% of the sector’s revenues and 5% of sector’s active subscribers, according to industry estimates.

Around 50-60% of these subscribers are enterprise customers, and 34% of post-paid subscribers are situated in the three metro and another 36% in urban centric A-circles.

Bharti Airtel as well as other telecom operators like Reliance Jio and Vodafone Idea had last hiked tariffs in December 2019. That time the tariffs were raised for the pre-paid users.

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