Vodafone Idea CEO Akshaya Moondra on Wednesday called for more frequent tariff revisions, suggesting they should occur every nine months instead of annually. He cited the current state of average revenue per user (Arpu) growth and the inadequate returns on capital expenditure among private telecom operators.
“In a normal scenario, a one-year gap between two tariff hikes would be ideal. However, given the financial condition of the telecom sector, where neither the market leader nor any other player is generating sufficient returns on capital, it would be justified to have shorter intervals between hikes. A frequency of nine months could be more appropriate,” Moondra stated while addressing queries about the next round of tariff increases in a post-earnings call with analysts.
The last tariff revision by private telcos took place in July 2024. If Moondra’s proposal is followed, the next round should occur by March 2025. He said that another increase in tariffs would further drive Arpu growth, a crucial metric for telecom operators. Beyond tariff hikes, improving the subscriber mix would also help sustain Arpu momentum. Vodafone Idea’s Arpu for the quarter ending December 31, 2024, rose 4.2% sequentially to Rs 173, attributed to the tariff hike flow-through and a better customer mix supported by network enhancements.
Moondra said that converting secondary SIM users into primary subscribers could significantly boost Arpu, as primary SIMs are recharged more frequently. He also highlighted the benefits of migrating more customers to postpaid plans and reiterated his support for a consumption-based pricing model rather than a uniform tariff structure.
On key performance indicators (KPIs), he pointed to improvements in data consumption and active user base over December and January. Vodafone Idea has struggled with lower data consumption compared to competitors, with per capita usage at 15.5 GB, significantly trailing Bharti Airtel’s 24.5 GB and Reliance Jio’s 32.2 GB. The company has also been losing active users, a trend it attributes to liquidity constraints limiting network investments.
However, after raising funds through a public offering and promoter contributions, Vodafone Idea has started expanding its 4G coverage while preparing for its commercial 5G launch. “With initial investments leading to better coverage and improved user experience, we are witnessing positive trends. In December and January, our visitor location register (VLR) subscriber numbers showed net gains in 11 circles,” Moondra stated.
He added that data consumption on Vodafone Idea’s network has been rising, driven by new high-data allowance plans. The telco expects this trend to continue as capital expenditure investment accelerates. The company plans to commercially launch 5G services in Mumbai, Bengaluru, and Delhi by March 2025, followed by rollouts in other priority regions.
Moondra also noted that the outflow of customers to BSNL, which did not implement a tariff hike in July, has slowed. Vodafone Idea’s net port-outs have declined significantly in the past six months, while net port-ins from BSNL have increased.
Regarding debt financing, Moondra did not provide a specific timeline but acknowledged that banks are seeking clarity on the adjusted gross revenue (AGR) issue. As of December 31, 2024, Vodafone Idea’s AGR-related liabilities to the government stand at Rs 77,000 crore. While the company’s funding proposals to banks do not factor in potential relief in AGR dues, resolving this issue remains crucial for securing financial backing.
