“The promoters have invested Rs 1.90 lakh crore in the last 10 years, so to say that promoters are not being supportive is not correct,” Takkar said.
Vodafone Idea will soon go for a fundraising exercise and the company’s co-promoters will have the option and opportunity to participate in it, CEO and managing director Ravinder Takkar said on Wednesday. He said that the recent telecom reforms unveiled by the government has addressed all investor concerns and opened the doors for new investments. “The enthusiasm and interest to invest in the sector has increased with the government’s package,” Takkar said.
Takkar told FE, in his first media interaction after the government announced a relief package for the telecom industry on September 15, that to what extent the co-promoters will participate and in what ways is something which only they can answer, but they have supported the company all along. “The promoters have invested Rs 1.90 lakh crore in the last 10 years, so to say that promoters are not being supportive is not correct,” Takkar said.
To a specific query on a statement by a Vodafone Plc spokersperson that the company’s stand remains intact that it will not infuse any equity in its Indian operations, Takkar said that he’s not aware of any such statement and by whom it has been made.
He said that with the announcement of the reforms package, Vodafone Idea is in a much better position and it’s time to state in no uncertain terms that the company will remain in the market, it will not only survive but also be competitive. “The government sees the telecom sector as important and wants three private players to stay and there’s no doubt that we will not only stay but also be competitive. It was always our conviction but not always understood by other market participants,” Takkar said.
Regarding the clause related to the four-year moratorium on adjusted gross revenue and spectrum dues, where the operators have the option to pay the deferred net present value (interest) amount in equity, Takkar said that this is something the company may be interested in. However, he added that once the guidelines regarding it are finalised by the finance ministry, the company’s board will take a final decision. “After the guidelines are announced, we would know exactly what the conversion would look like. But I think our understanding so far is that the interest associated with the delay is the choice that we can make and convert into equity. I would need to see the details and need approval from the board but I would imagine that is something we would be open to exercise,” Takkar said.
On the second part where the government has the option of converting the principal amount, in case a company fails to pay at the end of four years, into equity, Takkar said that since the AGR dues need to be paid over a period of five years and spectrum even longer, till the duration of its lease, there will be enough time to look into the issue. “There is relief in paying right now but even after four years there could be an opportunity for government to continue providing liquidity to the industry,” he said.
Takkar said that the moratorium has given the company the opportunity to invest in networks, customer service and in buying more spectrum. He did not disclose the amount of cash flow relief the company would get, saying that let first the department of telecommunications calculate the amount. However, analysts have pegged the overall deferred amount for the four-year period at around Rs 92,000 crore.
Regarding the need to have a floor price for tariffs, a demand which was pursued by Vodafone Idea till recently, Takkar said that with this package there’s no need for it. He said that in the past pricing was used as a tool to create stress in the industry and therefore the operators had demanded for a floor price. “Since the government has said that reforms will happen, am sure pricing will also start to improve in the sector. The environment is such where the industry can take the pricing in the right direction.
“I am confident that the pricing will start to improve, hopefully in the coming weeks and months. The average Arpu of the industry today is around Rs 130. Five years ago in 2016, it was over Rs 200. So, the most important thing is that we first we need to get the Arpu back to Rs 200 and eventually to Rs 300,” he said.
According to Takkar, Vodafone Idea won’t be an outlier in terms of raising tariffs but would also not shy of taking the first step when the time is right.