Vodafone Idea tweaks prepaid tariffs to boost realisations

By: |
August 18, 2021 4:30 AM

A few circles like Andhra Pradesh are still offering the Rs 49-plan with 28 days’ validity, but soon it will be increased to Rs 79. Also, the company is not offering outgoing SMS facility on any combo/validity packs of Rs 100 or less.

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 has increased tariffs for its entry-level prepaid plans by around 61%. The minimum 28-day validity pack is now charged at Rs 79 against Rs 49 earlier. The hike is not in headline tariffs but reduction in the validity period of schemes, which will improve the realisations.

Vodafone Idea has made the Rs 79-plan as the entry-level pack for 28 days’ validity across most of the circles.

A few circles like Andhra Pradesh are still offering the Rs 49-plan with 28 days’ validity, but soon it will be increased to Rs 79. Also, the company is not offering outgoing SMS facility on any combo/validity packs of Rs 100 or less.

Customers have to opt for an ‘unlimited calls’ pack if they want to avail the SMS facility. The minimum unlimited pack with 28 days’ validity comes for Rs 149.

Although the company is still offering a few prepaid packs below Rs 79, the validity for them is 14 days or 21 days. For instance, the Rs 49-prepaid pack now offers 14 days’ validity while the Rs 65 one is valid for 21 days.

Even after the tweaks, Vodafone Idea has got maximum number of prepaid packs below Rs 100.

It must be mentioned here that more than 50% of Vodafone Idea subscribers are still on 2G, which yields low-priced recharges.

As of April, of 281.90 million wireless subscribers, Vodafone Idea has only 122.53 million broadband users while Bharti has 190.99 million broadband users out of a base of 352.91 million. Jio has 427.67 million wireless broadband subscribers.

Earlier, Vodafone Idea had restructured enterprise postpaid tariffs in a bid to improve realisation per customer.

Analysts feel that the telecom service provider needs to do much more to increase revenues, if it wants to survive in the market — one of them being increasing headline tariffs. Even the company’s management feels that tweaking tariff plans may not be enough unless the structural issues are sorted out.

“While these tariff interventions are steps in the right direction and will help in improving average revenue per user (Arpu), such changes are not material enough to solve the structural issues that the industry is facing,” Vodafone Idea CEO Ravinder Takkar said on Monday at the earnings call with analysts.

Takkar said the company continues to engage with the regulator on floor pricing, even though the Telecom Regulatory Authority of India (Trai) has indicated against putting in place a floor pricing mechanism, terming it anti-consumer.

The financial problems of Vodafone Idea were compounded by Supreme Court’s refusal to allow recalculation of adjusted gross revenues (AGR) dues.

The company has not been able to close a fund raise to the tune of `25,000 crore, which was announced in September last year.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1SpiceJet now introduces interim fixed pay system; some pilots flag continuing salary cuts
2HDFC Bank aims to tap more rural MSMEs; plans to expand reach to 2 lakh villages in 2 years
3FM Sitharaman: MSMEs were earlier looked by banks as only cameo of larger businesses which they were not